Ukraine: Oil prices ignite, Wall Street worries

Oil prices soared on Friday and Wall Street showed strong jitters as stock indices accelerated their slide as the risk of a Russian invasion of Ukraine escalated, according to the White House.

The price of Brent crude from the North Sea for delivery in April ended on a jump of 3.31% to 94.44 dollars, the highest since September 2014.

In New York, a barrel of West Texas Intermediate (WTI) for March delivery rose 3.58% to $93.10, also the highest in more than seven years.

The barrel of American oil had even climbed by more than 5% at the beginning of the afternoon just after a declaration by the American Secretary of State Anthony Blinken estimating that Russia could “at any time” invade Ukraine on the borders of which it has massed more than 100,000 soldiers and heavy weapons for months.

If they invade, prices will go up

The New York Stock Exchange saw its decline accelerate, frightened by these signals of a possible imminent Russian invasion, the American government estimating that it could occur during the Olympic Games.

At the close, the Dow Jones ended down 1.43%, the Nasdaq index plunged 2.78% and the broader S&P 500 index 1.90%.

“There’s a lot of nervousness in the stock market,” observed Peter Cardillo of Spartan Capital.

“If they invade, obviously that’s going to put the stocks under pressure,” the analyst explained. “This means that prices will rise”, mainly of energy and raw materials, “that disposable income will decrease”, warned the analyst.

At a press conference, White House National Security Adviser Jake Sullivan solemnly warned that an invasion of Ukraine could take place “during the Olympics” and demanded from the Americans there that they leave the country “within 24 to 48 hours”.

“If the market hadn’t fully priced in the risk of a Russian incursion into Ukraine, it could well start to do so,” noted Art Hogan, chief strategist for National Securities, adding that markets had put in “risk aversion” mode.

The United Kingdom also advised its nationals on Friday to leave Ukraine immediately as a safety measure.

Nervousness in the market

The oil market for its part was also “very nervous”, indicated analyst Andy Lipow, of Lipow Oil Associates.

Western leaders have brandished threats of “swift and drastic” sanctions against Moscow in the event of an invasion, which will first target the financial and energy sectors.

Russia is a crucial gas supplier for Europe and particularly Germany.

The black gold price curve suddenly jumped, taking almost two dollars a barrel in less than half an hour, after the declarations of the head of American diplomacy in Melbourne, Australia, followed by a conference of White House press.

“Under these circumstances, the oil market does not want to be taken aback over the weekend and is gripped by concern that an invasion by Russia could provoke sanctions which, in conjunction with the invasion, could result in supply disruptions,” added Andy Lipow.