Oil surges 10% in Asia, euro slides amid Russian-Ukraine war
SYDNEY, March 7 (Reuters) – Oil prices soared more than 10% in hectic trading on Monday as the risk of a U.S. and European ban on Russian product and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets.
In addition to Asia’s oil surge, the euro extended its slide and commodities of all stripes were on the rise as the Russian-Ukraine conflict showed no sign of cooling. Russia calls the campaign it launched on Feb. 24 a “special military operation”, saying it has no plans to occupy Ukraine.
Brent was quoted $12.73 higher at $130.84, while U.S. crude rose $9.92 to $125.60.
The potential blow to international economic growth saw S&P 500 stock futures drop 1.1%, while Nasdaq futures shed 1.4%.
Futures for Japan’s Nikkei (.N225) were trading around 300 points below the cash close on Friday, while U.S. Treasury futures jumped 10 ticks as investors sought safe-havens.
Having climbed 21% last week, Brent crude was further energised by the risk of a ban of Russian oil by the United States and Europe.
“If the West cuts off most of Russia’s energy exports it would be a major shock to global markets,” said BofA chief economist Ethan Harris.
He estimates the loss of Russia’s 5 million barrels could see oil prices double to $200 a barrel and lower economic growth internationally.
And it is not just oil, with commodity prices having their strongest start to any year since 1915, says BofA. Among the many movers last week, nickel rose 19%, aluminium 15%, zinc 12%, and copper 8%, while wheat futures surged 60% and corn 15%.