OIL PRICES SOAR, MARKETS FALL AS RUSSIA ATTACKS UKRAINE

Fri 25 January 2022:

After breaking out of Russia’s conflict with Ukraine, the markets have shuddered and then swung wildly.

The current situation threatens to push inflation, squeezing the global economy even more.

Stocks fell initially on Thursday. The prices have also surged for wheat, oil and other commodities.

This comes as the world is worried that the conflict may disrupt global supplies.

But as the day progressed, things started to look better.

The S&P 500 nosedived 2.6 per cent on Wall Street at the start of trading. Soon, it recovered the drop and flipped to a gain of 1.5 per cent.

In Europe, the heaviest losses hit stocks. The German DAX also went down 4 per cent.

The conflict also looked to push prices even higher at gasoline pumps and grocery stores around the world.

On both sides of the Atlantic, the prices of oil briefly went above USD 100 per barrel to its highest levels since 2014. But soon it came down and the price of oil in the US settled at USD 92.81.

For natural gas, the spot price in Europe also jumped over 50 per cent.

The FTSE 100 in London tumbled 3.9 per cent while the Russian indexes plunged by a third or more after stock exchange in Moscow briefly suspended trading on all its markets on Thursday morning.

In Paris, the CAC 40 lost 3.8 per cent, and Asian markets also fell by nearly 2 per cent or more.

Analysts say Brent is likely to remain above $100 a barrel until significant alternative supplies become available from U.S. shale or Iran, for example.

The United States and Iran have been engaged in indirect nuclear talks in Vienna that could lead to the removal of sanctions on Iranian oil sales.

Iran’s top security official Ali Shamkhani said on Twitter that it is possible to achieve a good nuclear agreement with Western powers after significant progress in negotiations.

Analysts are warning of inflationary pressure on the global economy from $100 oil, especially for Asia, which imports most of its energy needs.

“Asia’s Achilles heel remains its vast import needs for energy, with surging oil prices bound to take a hefty bite out of income and growth over the coming year,” said HSBC economist Frederic Neumann.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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