Russia’s military incursion into Ukraine and the threat of a wider war are pushing energy prices higher, threatening the U.S. economic recovery while limiting the options available to the Federal Reserve as the central bank tries to gain control over a bout of inflation that has proved to be more severe and more enduring than expected.

Oil prices approached $100 a barrel Tuesday, hitting levels not seen since 2014. Analysts at JPMorgan estimate that if the military conflict between Russia and Ukraine escalates, oil could top $120, and if the war interferes with Russian energy exports, the price could move higher still.

Economist Joe Brusuelas of the consulting firm RSM estimates that if oil prices hit $110 a barrel, inflation in the U.S. could hit 10% on a year-over-year basis – a level not seen since 1981 – while economic growth could be reduced by a full percentage point.

“The U.S. and global economy should prepare for a modest energy shock,” told Politico Tuesday. “Growth is going to slow and inflation is going to increase.”

A problem for the Fed: The U.S. central bank is expected to start raising interest rates in March as part of its effort to reduce inflation, but the threat to economic growth could complicate the situation. Some inflation hawks have been calling for a half-percentage-point increase in March, with multiple quarter-point hikes in the months following. But the Ukraine conflict may reduce the odds of such a big hike next month and limit the number of increases during the year, as officials seek to cushion the blow of the energy price spike.

“Basically, now they're positioned to hike into a slowing economy with higher inflation and significant uncertainty around the supply of and pricing of energy,” Brusuelas said. “So yeah, this is a major problem.”

Mohamed A. El-Erian, the former CEO of bond giant Pimco, warned that the Fed may find itself with few good options in the coming months as it faces down what could be a stagflationary shock. “Having missed multiple windows for orderly normalization, it finds itself in the midst of rising geopolitical strains with already very low interest rates and a bloated balance sheet,” he said in an opinion piece Tuesday. “Making things more challenging, the Fed has eroded its inflation credibility and lost control of the monetary policy narrative.”

Time to revive the child tax credit? Brusuelas says that U.S. officials may need to find a way to address the energy shock, which will likely slow growth and damage households’ balance sheets. One easy option would be to revive the expanded child tax credit, which rapidly provided extra income to millions of American households last year before expiring in December.