February 24, 2022
Oil Price Rises Above $100 for first time in 7years as Russia Invade Ukraine
Oil prices broke above $100 a barrel for the first time since 2014, on Thursday after Russian President Vladimir Putin ordered invasion of Ukraine. Markets displayed all the predictable reactions. Europe’s stock markets tumbled nearly 4 per cent in frenzied selling and Wall Street opened down 2.5 per cent, while some traders described Russian and
Ukraine markets as “untradeable” due to the sheer scale of the falls and Russia and Kyiv’s central banks tried to step in.
The scramble for safety saw top-rated government bonds rally strongly along with other traditional storm shelters such as the dollar, Swiss franc, Japanese yen and gold.
Putin said he had authorised what he called a “special military operation” though Ukraine. Western governments labelled it a full-scale invasion.
U.S. President Joe Biden said “severe sanctions” would be imposed on Russia after the attacks, with Europe’s leaders vowing to also freeze assets and shut Russian banks out of their financial markets.
“No one expected this and speculation of Putin’s next step will be the major focus of the coming days,” said Hans Peterson, global head of asset allocation at SEB investment management.
“But this does happen in a phase of the business cycle that is quite strong,” he added, saying how high energy and commodity prices now go is also crucial.
Chaotic moves in Russia’s markets saw the rouble weaken nearly 7 per cent to an unprecedented 86.98 per dollar and there were record 40 per cent falls on the Moscow stock exchange which had been forced to suspend trading early on.
Ukraine meanwhile was forced to suspend trading in its currency as its bonds crashed violently as investors bet that it could now default again, as it did after Russia’s 2014 annexation of Crimea.
“It is complete chaos,” send abrdn portfolio manager Viktor Szabo. “Ukraine is untradeable right now and it is carnage in the Russian markets across sovereign and corporate debt”.
