May 20, 2022

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Crude oil jumps on US-Russian oil embargo, Asian stocks fluctuate

Crude oil jumps on US-Russian oil embargo, Asian stocks fluctuate

A man looks at stock market watchers in Taipei, January 22, 2008. REUTERS/Nikki Luo

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  • Brent crude rose 2.66% above $131 a barrel
  • The United States imposes an embargo on Russian oil and Britain to gradually abandon imports
  • MSCI Asia excluding Japan turns lower, Nikkei trims gains
  • Gold slips from record levels

SHANGHAI (Reuters) – Crude oil prices jumped again on Wednesday, while Asian stocks struggled for stability as investors assessed the impact of the escalating conflict in Ukraine and a new U.S. embargo on Russian oil.

The price of a barrel of crude oil, which had already risen in January due to supply concerns and expectations of a global economic recovery, has skyrocketed since Russia launched its invasion of Ukraine on February 24. Oil has now nearly doubled in early December. a little.

At the risk of rising fuel prices in the United States that could curb economic growth, President Joe Biden on Tuesday imposed an immediate ban on imports of Russian oil and other energy in response to the invasion, amid strong support from American voters and lawmakers.

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This ban comes at the forefront of comprehensive US and European sanctions imposed on Moscow for waging the largest war in Europe since World War II. Russian strikes targeted Ukrainian cities and killed hundreds of civilians. Read more

Britain also announced that it would phase out imports of Russian oil and petroleum products by the end of 2022. Read more

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“The oil shock is inherently cumulative rather than one-off, and the potential for the market to reach $150 before returning to $100 is easy for investors to digest,” said Stephen Innes, managing partner at SPI Asset Management.

“Imposing sanctions without first developing an alternative supply contingency threatens Brent crude (rising) much higher.”

Global benchmark Brent crude last traded at $131.39 a barrel, up 2.66% on the day, but still far from the peak of $139.13 touched on Monday.

US West Texas Intermediate crude rose 2.19% to $126.41 a barrel.

Russia has called its actions in Ukraine a “special operation” and warned earlier this week that prices could rise as high as $300 a barrel and could shut down its main gas pipeline to Germany if the West blocks its oil exports. Read more

In stock markets, MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It fell 0.26%, as the Chinese stock reversal erased earlier gains.

Chinese CSI300 Premium Index (.CSI300) It fell 1.27% after inflation data reflected a combination of weak domestic demand and higher commodity prices, and as increasing numbers of coronavirus cases continued to be reported. Read more

In Hong Kong, where infections have risen to record levels, Hang Seng (.HSI) It decreased by more than 2%. Read more

But broader regional losses are kept in check by gains elsewhere, with the resource-heavy Australian ASX 200 (.AXJO) 0.85% higher. In Tokyo, the Nikkei (.N225) It rose 0.3%.

“I think we’re feeling Russia’s fatigue. We now have 10-12 days of bombing Russian headlines. And while it’s tragic what’s going on there, at the same time I think we’ve effectively underestimated the worst of it,” said Matt Simpson, senior market analyst at City Index. : “the worst”.

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Volatile stock price movements in Asia came after another day in the red on Wall Street, where the Dow Jones Industrial Average (.DJI) The S&P 500 is down 0.56%. (.SPX) The Nasdaq Composite Index lost 0.72% (nineteenth) It decreased by 0.28%.

“Markets remain volatile and unable to be confident in the price implications of news flows given the complex state of the global economy,” said Rodrigo Cattrell, senior forex analyst at National Australia Bank.

In a sign of a pullback from safe-haven assets, the yen weakened 0.16 to 115.84, while the dollar fell against a basket of its peers to 99.056.

The euro rose 0.07% to $1.0907, and the ruble was last rate at $122.5 to the dollar.

US Treasury yields are down, with benchmark 10-year yields at 1.8507%, down from 1.871% late Tuesday. The yield of the last two years of the bond is 1.6008%, down from 1.629%.

Gold settled 0.14% at $2,055.31 an ounce, after falling earlier on the strong dollar.

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(Reporting by Andrew Galbraith) Editing by Sam Holmes and Kim Coogill

Our criteria: Thomson Reuters Trust Principles.