Oil rose over the $100 threshold and Asian stocks sold off on Wednesday after Russia intensified its attacks on Ukraine’s largest city and adopted more aggressive tactics.
Brent crude, the international benchmark, rose 4.4 percent to a seven-year high of $109.59 a barrel in early Asian trade, while US West Texas Intermediate crude rose 4.7 percent to $108.29.
The recent gains in oil, which have lifted Brent about 16 percent since Russian President Vladimir Putin launched his invasion, came as Russia ramped up its bombing of Ukraine’s largest city.
The sanctions imposed by Western countries on Russia have sought to avoid the energy sector, but they have nonetheless led to volatility in global markets due to fears of supply disruptions. But US energy group ExxonMobil said on Tuesday it would exit Russian oil and gas operations in the latest corporate exit in response to the invasion.
Joe Biden has also come under increasing pressure to ban Russian oil imports, with both Republicans and Democrats calling on the US president to cut energy ties with the Kremlin. In his State of the Union address on Tuesday, Biden expressed support for punitive measures against Russia but stressed that controlling prices was his “top priority.”
“It is likely that the conflict between Russia and Ukraine will continue to dominate markets for the foreseeable future,” said Robert Carnell, head of Asia Pacific research at ING. “Yesterday’s announcement that Russia will not pay coupons to holders of its government debt to foreigners should push investors further into safe havens.”
In Asian markets, shares sold off, led by a 1.7 percent drop in Japan’s Topix Index. China’s CSI 300 Index of shares listed in Shanghai and Shenzhen fell 1 percent, while the Hang Seng Index in Hong Kong fell 0.6 percent.
The declines followed sharp falls on Wall Street, with the S&P 500 and the technology-focused Nasdaq composite both down 1.6 percent. Futures led the S&P 500 Index up 0.1 percent on Wednesday, while the Euro Stoxx 50 was about to fall 0.1 percent after ending Tuesday’s session 2.4 percent lower.
US Treasury yields stabilized in the sovereign bond markets after the rally on Tuesday, as investors sought safe havens to mitigate the decline in stock prices. The yield on the 10-year US Treasury rose 0.03 percentage point to 1.7565 after declining by 0.1 percentage point during the previous session.
In currencies, the ruble has stabilized at around 108 against the dollar after a severe crash this week that has put it down about 30 percent since the invasion began.
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