Oil prices jump, stocks fall over inflation, Russia concerns
Oil and gas prices surged while stock markets fell yesterday on renewed fears over Russian energy supplies and soaring inflation.
Crude oil futures jumped more than 4 percent with Brent North Sea, the international benchmark, exceeding $120 per barrel.
Moscow could face more sanctions as U.S. President Joe Biden left on March 23 for Europe on a mission to bolster Western unity against Russia, though Europe has avoided an oil embargo so far.
Concerns over supply also rose as Russia warned that repairs at a terminal near a Black Sea port may take up to two months and lead to a drop in oil exports of about one million barrels per day.
Gas prices rose after President Vladimir Putin announced that Russia will now only accept rubles for gas deliveries to “unfriendly countries,” which include EU nations. The ruble, which has plummeted since the war broke out, gained against the dollar and euro following Putin’s announcement.
Europe’s gas price reference Dutch TTF briefly rose past 130 euros per megawatt hour before falling back to 117 euros later in the day.
“Russia is now trying to pressure the West with counter sanctions - and reduce its dependence on foreign currencies,” Swissquote senior analyst Ipek Ozkardeskaya told AFP.
On stock markets, rising concerns about a U.S. “soft landing” amid increasingly aggressive comments from Federal Reserve officials sent Wall Street equities sharply lower.
On March 23, London’s benchmark FTSE 100 index finished 0.2 percent lower as British finance minister Rishi Sunak said the U.K. economy would grow far slower than expected this year due to the Ukraine war and soaring global inflation.
In Frankfurt, the DAX closed 1.3 percent lower while the Paris CAC 40 was down 1.2 percent.
The Russian stock market resumed limited trading yesterday under heavy restrictions almost one month after prices plunged and the market was shut down following Moscow’s invasion of Ukrainian territories.
Trading of a limited number of stocks including energy giants Gazprom and Rosneft took place under curbs that are meant to prevent a repeat of the massive selloff that took place Feb. 24. Foreigners cannot sell and traders are barred from short selling, or betting prices will fall.
The benchmark MOEX index gained 8 percent in the first minutes of trading.
The reopening of stock trading on the Moscow Exchange has little impact on investors outside Russia. Its market capitalization is a fraction of that of major Western or Asian markets - $773 billion at the end of last year.
Foreign investment managers lost one reason to buy Russian stocks after MSCI Inc. declared the market to be “uninvestable” following the Feb. 24 invasion and removed it from global indexes.