Stocks and Trade Reaction to the Russo-Ukraine War: Live Updates
Energy prices jumped on Monday as fears of Russian supply cuts as a result of the invasion of Ukraine ordered by President Vladimir V. Putin grew.
Oil prices rose for some time to as high as $138 a barrel, having returned to about $127 a barrel since 2008. European natural gas prices have risen even higher, with futures on the Dutch TTF exchange trading as high as 345 euros per megawatt-hour. Oil has reached above $500 a barrel.
Some analysts now say that Russia’s move to Ukraine is likely to have a long-term impact on commodity markets as Russia is central not only to the energy industry but also to a wide range of agricultural products and minerals. The futures of commodities like wheat, palladium and aluminum are skyrocketing.
Furthermore, as Citigroup analysts recently wrote, this geopolitical upheaval is taking place at a time when many countries have tried to tackle climate change within 30 years of fossils established over a century. Committed to “undo” fuel energy habits.
On Monday, the fall in the markets again spread to the stocks. Share prices in Asia fell sharply and Europe’s main indices were lower, with the DAX in Germany down 3 percent and the Stokes Europe 600 down 2.2 percent. On Wall Street, the S&P 500 was expected to fall 1.6 percent when trading began.
The latest increase in energy prices appears to have been caused by an emerging effort to restrict Russian energy exports as punishment for the country’s war against Ukraine. There have been calls from lawmakers in Washington to block imports of Russian oil, and Secretary of State Antony J. Blinken has added hope that some sort of sanction is in the works during his recent tour of countries near Ukraine.
“We are now in very active discussions with our European partners about imposing sanctions on imports of Russian oil into our countries, while of course, while at the same time maintaining a stable global supply of oil,” said Mr. Blinken. Said on “Meet the Press” on Sunday. “On NBC.
A sharp drop in the supply of oil and natural gas from Russia will cause major problems for both industrial users and consumers. According to the International Energy Agency, Russia is one of the world’s leading oil producers, accounting for one in 10 barrels produced globally, and about 60 percent of the country’s oil exports go to Europe.
Cutting Russian oil would force many of the refineries that normally process it to find other sources. While oil is a relatively flexible commodity, there are many different grades of crude oil, and a refiner may not always substitute one for the other. For example, Washington’s sanctions on Venezuelan crude prompted refiners in the United States to buy more Russian oil as an alternative, raising import levels.
On Saturday, Europe’s largest oil company, Shell, said it had bought a consignment of Russian crude because “supply from alternative sources did not arrive in time to avoid market supply disruptions”. Gasoline prices are already high. are soaring above $4 a gallon in the United States, with the price of it approaching a record set in 2008. According to data from Motor Club AAA, the average price in California was $5.34 on Monday, up from 51 cents the previous week.
Natural gas is less flexible than oil, and Europe is heavily dependent on it as a fuel, with Russia accounting for about a third of the supply in normal times. Analysts said the current prices do not look sustainable.
“It’s so expensive that you’re going to run the utilities at a huge loss,” said Henning Glostein, a director at Eurasia Group, a political risk firm.
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