Oil has surpassed the $ 100 threshold, and Asian stocks sold out on Wednesday after Russia stepped up attacks on Ukraine’s largest cities and adopted more aggressive tactics.
Brent crude, the international benchmark, rose 4.4 percent to a seven-year high of $ 109.59 a barrel at the start of Asian trade, while the US marker West Texas Intermediate rose 4.7 percent to $ 108.29.
The latest oil gains, which have left Brent nearly 16 percent higher since Russian President Vladimir Putin launched the invasion, came as Russia stepped up its bombing of Ukraine’s largest cities.
Sanctions imposed on Russia by Western countries seek to avoid the energy sector, but nevertheless fuel instability in global markets due to fears of supply disruptions. But US energy group ExxonMobil said on Tuesday it would leave Russian oil and gas operations, marking the latest corporate exit in response to the invasion.
Joe Biden has also come under increasing pressure to ban Russian oil imports, with Republicans and Democrats calling on the US president to sever energy ties with the Kremlin. In a speech on the state of the Union on Tuesday, Biden voiced support for sanctions against Russia, but stressed that price control was his “highest priority”.
“The Russia-Ukraine conflict is likely to 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 foreign holders on its national debt should push investors even further to safe havens.
In Asian markets, the stock sold off, driven by a 1.7% drop for the Japanese benchmark Topix. China’s CSI 300 index of shares registered in Shanghai and Shenzhen fell 1%, while Hong Kong’s Hang Seng index fell 0.6%.
The decline followed a sharp decline on Wall Street, where both the S&P 500 and the technology-focused Nasdaq Composite fell 1.6%. Futures hit the S&P 500 up 0.1 percent on Wednesday, while the Euro Stoxx 50 was set to fall 0.1 percent after ending a 2.4 percent down on Tuesday.
In government bond markets, the yield on US bonds stabilized after a rally on Tuesday as investors sought refuge to mitigate the fall in stock prices. Yields on 10-year US government securities rose 0.03 percentage points to 1.7565 after falling nearly 0.1 percentage points in the previous session.
In foreign currencies, the ruble has stabilized at around 108 against the dollar after a criminal crash this week, leaving it almost 30% lower since the invasion began.