Oil prices soar to 14 year high in wake of Russian invasion of Ukraine

March 7, 2022

In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.

Crude oil prices have soared to a 14-year high in the wake of Russia’s invasion of Ukraine, as economic sanctions on the country begin to hit the wider global economy.

Prices rose to $139 a barrel early on Monday on reports that the United States may introduce a blanket ban on buying Russian energy as it looked to other countries to increase supply.

Russia is the world’s second biggest producer of crude oil after Saudi Arabia and supplies almost one-third of Europe’s requirements. 

In turn, petrol prices have risen to an average of 155 pence per litre in the UK - as the country faces an already-prevalent cost of living crisis now being exacerbated by the conflict.

Elsewhere surrounding the conflict, dozens of companies have pulled out of Russia entirely - with giants Visa and Mastercard halting all sales, Apple and Google have restricted use of their mobile payment services and Paypal have also withdrawn from the country. Similarly, several well-known brands have halted their operations including Microsoft, Zara, Netflix and Jaguar Land Rover.

Amid the geopolitical and economic uncertainty stemming from the conflict in Ukraine and surging global oil prices, Japan’s stock markets registered losses for the week, with the Nikkei 225 Index falling 1.85% and the broader TOPIX Index down 1.67%.

The Russian stock market was closed during the week after the United States, Canada, and various European nations decided to cut off several Russian banks from SWIFT, an international banking and messaging network. In addition, sanctions were issued on Russia’s Ministry of Finance, Central Bank, and the National Wealth Fund - prohibiting transactions with these institutions and effectively “freezing” reserves in their respective jurisdictions.

In response to a crash in the ruble versus the US dollar last Monday, the central bank boosted short-term interest rates from 9.5% to 20%, imposed a temporary ban on nonresident investors holding Russian financial assets, and took other actions in an attempt to soften the impact on Russia’s financial system.

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