Oil and gas prices surged while stock markets fell on Wednesday on renewed fears over Russian energy supplies and soaring inflation.
Crude futures jumped more than four percent with Brent North Sea, the international benchmark, exceeding $120 per barrel.
The oil and gas price increases “may be contributing to the declines we’re seeing in equity markets, given the additional pressures that will be put on households and businesses should it be maintained,” said Craig Erlam, an analyst at OANDA, a foreign exchange platform.
Moscow could face more sanctions as US President Joe Biden left Wednesday for Europe on a mission to bolster Western unity against Russia, though Europe has avoided an oil embargo so far.
Concerns over supply also rose as Russia warned that repairs at a terminal near a Black Sea port may take up to two months and lead to a drop in oil exports of about one million barrels per day.
Gas prices rose after President Vladimir Putin announced that Russia will now only accept rubles for gas deliveries to “unfriendly countries”, which include EU nations.
The ruble, which has plummeted since the war broke out, gained against the dollar and euro following Putin’s announcement.
Europe’s gas price reference Dutch TTF briefly rose past 130 euros per megawatt-hour before falling back to 117 euros later in the day.
“Russia is now trying to pressure the West with counter-sanctions – and reduce its dependence on foreign currencies,” Swissquote senior analyst Ipek Ozkardeskaya told AFP.
“Now let’s see if the European leaders will have the guts to walk away from the Russia oil and gas, which would obviously neutralize Russia’s latest move. What a chess game,” she said.
– Inflation and war –
On stock markets, rising concerns about a US “soft landing” amid increasingly aggressive comments from Federal Reserve officials sent Wall Street equities sharply lower.
Earlier, London’s benchmark FTSE 100 index finished 0.2 percent lower as British finance minister Rishi Sunak said the UK economy would grow far slower than expected this year due to the Ukraine war and soaring global inflation.
In Frankfurt, the DAX closed 1.3 percent lower while the Paris CAC 40 was down 1.2 percent.
“The markets continue to contend with the uncertainty regarding the ongoing war in Ukraine, and persistently elevated and broad-based inflation pressures,” analysts at the Charles Schwab investment firm said in a note.
Asian stock markets closed higher after a Wall Street rally the previous day.
– Key figures around 2100 GMT –
Brent North Sea crude: UP 5.3 percent at $121.60 per barrel
West Texas Intermediate: UP 5.2 percent at $114.93 per barrel
New York – DOW: DOWN 1.3 percent at 34,358.50 (close)
New York – S&P 500: DOWN 1.2 percent at 4,456.24 (close)
New York – Nasdaq: DOWN 1.3 percent at 13,922.60 (close)
London – FTSE 100: DOWN 0.2 percent at 7,460.63 (close)
Frankfurt – DAX: DOWN 1.3 percent at 14,283.65 (close)
Paris – CAC 40: DOWN 1.2 percent at 6,581.43 (close)
EURO STOXX 50: DOWN 1.5 percent at 3,869.22 (close)
Tokyo – Nikkei 225: UP 3.0 percent at 28,040.16 (close)
Hong Kong – Hang Seng Index: UP 1.2 percent at 22,154.08 (close)
Shanghai – Composite: UP 0.3 percent at 3,271.03 (close)
Euro/dollar: DOWN at $1.1013 from $1.1029 late Tuesday
Pound/dollar: DOWN at $1.3204 from $1.3262
Euro/pound: UP at 83.36 pence from 83.16 pence
Dollar/yen: UP at 121.12 yen from 120.80 yen