TOKYO (AP) – The price of oil jumped about USD10 a barrel and shares were sharply lower yesterday as the conflict in Ukraine deepened amid mounting calls for harsher sanctions against Russia.
Brent crude oil surged more than 12 per cent during the day in Asia, while benchmark United States (US) crude gained about USD10 at more than USD125 a barrel.
The latest market turmoil followed a warning from Russian President Vladimir Putin that Ukrainian statehood was imperiled as Russian forces battered strategic locations. A temporary cease-fire in two Ukrainian cities failed over the weekend — and both sides blamed each other.
France’s CAC 40 dipped 3.6 per cent in early trading to 5,841.82, while Germany’s DAX lost nearly 4.1 per cent to 12,564.78. Britain’s FTSE 100 dropped 2.0 per cent to 6,848.87. US shares were set to drift lower with Dow futures down 1.6 per cent at 33,048.00. S&P 500 futures fell 1.7 per cent to 4,252.00.
The price of gold, which is viewed as an investor safe haven in times of crisis, jumped USD26 an ounce to USD1,992.90. Oil prices came under additional pressure after Libya’s national oil company said an armed group had shut down two crucial oil fields. The move caused the country’s daily oil output to drop by 330,000.
US House of Representatives Speaker Nancy Pelosi said the House was exploring legislation to further isolate Russia from the global economy, including banning the import of its oil and energy products into the US.
Brent crude, the international pricing standard, hit USD139.13 per barrel before falling back. It was trading up USD9.22 at USD127.33 a barrel in London.
US crude soared USD9.70 to USD125.38 a barrel in electronic trading on the New York Mercantile Exchange. Its all-time high was marked in July 2008, when the price per barrel of US crude climbed to USD145.29.
That pushed the average price for regular gasoline in the U.S. up almost 41 centsm past USD4 per gallon (3.8 litres) on average for the first time since 2008, according to the AAA motor club.
The all-time high for average gasoline prices was set on July 17, 2008 at USD4.10 per gallon.
Higher fuel costs are devastating for Japan, which imports almost all its energy. Japan’s benchmark Nikkei 225 dipped 2.9 per cent to finish at 25,221.41.
Hong Kong’s Hang Seng dropped 3.9 per cent to 21,057.63, while South Korea’s Kospi slipped 2.3 per cent to 2,651.31. Australia’s S&P/ASX 200 shed 1.0 per cent to 7,038.60.
The Shanghai Composite lost 2.2 per cent to 3,372.86.
“The Ukraine-Russia conflict will continue to dominate market sentiments and no signs of conflict resolution thus far may likely put a cap on risk sentiments into the new week,” said market strategist at IG in Singapore Yeap Jun Rong.
“It should be clear by now that economic sanctions will not deter any aggression from the Russians, but will serve more as a punitive measure at the expense of implication on global economic growth. Elevated oil prices may pose a threat to firms’ margins and consumer spending outlook,” Yeap said.
