Oil jumps more than 5% on Russia tensions





The price of benchmark oil contract, Brent North Sea crude, jumped more than 5% to back above $100 per barrel after Russia rejected a ruling from the UN’s court to suspend its Ukraine offensive. Photo: AFP  

LONDON: Oil prices soared Thursday on tensions surrounding key producer Russia, as equities diverged with traders tracking also interest rate decisions and China’s pledge to support volatile markets.

The price of benchmark oil contract, Brent North Sea crude, jumped more than 5% to back above $100 per barrel after Russia rejected a ruling from the UN’s top court to suspend its Ukraine offensive.

“Russia’s invasion is still dictating price action… given the country’s global importance in terms of supply,” Interactive Investor analyst Victoria Scholar told AFP.

The fallout from the war in Ukraine could cut global economic growth by “over 1% point” in the first year after the invasion, the OECD grouping of developed economies said in a report.

The impact “if sustained” would produce “a deep recession in Russia” and further increase global consumer price inflation by approximately 2.5% points, it added.

The warning came as Russia’s finance ministry said it had carried out interest payments on two foreign bonds, avoiding default for now after it was hit by unprecedented Western sanctions over Ukraine.

Central banks

Central banks were also in focus with the Bank of England expected to announce a third straight interest rate rise to combat decades-high UK inflation.

The Bank of England (BoE) gives its latest rate decision at 1200 GMT, a day after the Federal Reserve lifted US borrowing costs to tackle soaring prices.

“The global economy faces elevated levels of inflation because of various factors, including from surging energy and commodity prices,” noted Fawad Razaqzada, analyst at ThinkMarkets.

“While the Fed has just started its hiking cycle, the BoE is well on the way, having raised interest rates in its previous two meetings.”

In Asia, Hong Kong’s main stocks index closed with another massive gain, as investors pile back in after China’s pledge to support markets.

The Hang Seng surged 7%, a day after a 9% jump.

Another blistering surge in tech firms helped Hong Kong extend its recovery from the recent rout, while traders also cheered soothing comments on the US economy by the Fed after it lifted interest rates.

China’s top economic official has vowed measures to support beaten-down markets and indicated that a debilitating crackdown on the technology sector was nearing its end.

“The statement addressed so many issues on various fronts, which is really rare,” said Ding Shuang at Standard Chartered.

“Selloffs tended to be self-fulfilling partly because of the lack of response from the government,” but part of the government’s aim is likely to break that inertia and stabilise expectations, he added.

Key figures around 1045 GMT

Brent North Sea crude: UP 5.0% at $102.95 per barrel

West Texas Intermediate: UP 4.5% at $99.27 per barrel

London – FTSE 100: UP 0.1% at 7,296.04 points

Frankfurt – DAX: DOWN 0.6% at 14,352.04

Paris – CAC 40: FLAT at 6,588.75

EURO STOXX 50: DOWN 0.3% at 3,877.75

Hong Kong – Hang Seng Index: UP 7.0% at 21,501.23 (close)

Tokyo – Nikkei 225: UP 3.5% at 26,652.88 (close)

Shanghai – Composite: UP 1.4% at 3,215.04 (close)

New York – DOW: UP 1.6% at 34,063.10 (close)

Euro/dollar: UP at $1.1039 from $1.1038 late Wednesday

Pound/dollar: UP at $1.3180 from $1.3148

Euro/pound: DOWN at 83.75 pence from 83.90 pence

Dollar/yen: DOWN at 118.59 yen from 118.73 yen






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