Russia Ukraine War: why oil prices increase and Cryptos decrease

As a result of Russian President Vladimir Putin’s deployment of soldiers to Ukraine’s rebel regions, Brent oil prices reached $96.7 a barrel on Tuesday, the highest record since September 2014. It has been called a flagrant breach by the West of international law, but mounting global tensions and the fear of an invasion in Ukraine have produced an increase in oil prices and a decline in stock exchanges.

Since December 1, 2021, when oil was selling at $69.5, the benchmark Sensex at the BSE plummeted by more than 1,250 points in the early trading hours on Tuesday and touched an all-time low of 56,394, according to the latest data.

As the possibility of Russian invasion looms in Ukraine after Putin’s deployment of soldiers to the rebel strongholds of Donetsk and Luhansk, the surge has been driven mostly by supply-side interruptions. Russo-Ukrainian conflict might lead to global oil supply disruptions as well as penalties from the United States and Europe. 

Following the normalization of the global economy following the Omicron wave, there is also worry about the rising mismatch between demand and supply.

With a price of $100.8 per barrel, the S&P Global Platts Brent benchmark reached its highest level since September 2014 on February 16.

Russia Ukraine War Impact On The Oil Price

Investors were rattled by Vladimir Putin’s decision to send soldiers into Ukraine, causing oil prices to rise beyond $100 and global stock markets to fall in early trade on Tuesday.

In the early hours of Tuesday, Brent crude oil rose about 4%, reaching just over $99 a barrel, the highest price in more than seven years, as concerns about disruptions to supply grew.

On Tuesday morning, the Moex Russia Index was down more than 5% after Monday’s steep losses, while European and Asian stocks were also down sharply. The DAX index in Germany, the CAC index in France, and the FTSE MIB index in Italy all declined roughly 1%.

London’s FTSE 100 index was down by 0.4 percent, with oil and gas firms Shell and BP among the UK’s blue-chip index’s highest gains.

Investors wiped over 13% off Petropavlovsk’s market value in early trade, making it the largest faller on the FTSE 250. Shares in Ferrexpo, a Ukrainian iron ore mining company, declined 3%.

The majority of European indexes had recovered their losses by noon, while Russia’s Moex was down more than 4%.

The price of Brent oil is expected to rise above $100 a barrel in the next few days because of supply concerns. Early in September of 2014, the price was last over that mark.

Oil prices rose 5.2 percent to $95.81 per barrel in the US. As the situation in Ukraine escalates, European gas prices have risen by as much as 13 percent. Ukrainian pipelines provide over a third of Russia’s gas supply to Europe.

There are growing fears about supply interruptions in light of the impending sanctions on Russia, the world’s second-largest oil exporter and top natural gas producer, according to Interactive Investor’s head of investments, Victoria Scholar.

Putin’s hostility and the prospect of conflict may easily send oil prices beyond $100 a barrel to new highs not seen since 2014 if they persist.

After Putin signed a treaty recognizing the independence of Donetsk and Luhansk, two Russian-controlled areas in eastern Ukraine, and sent soldiers there to fulfill “peacekeeping responsibilities,” international sanctions are likely.

Minister for health Sajid Javid said that “the assault on Ukraine has started” after the announcement.

On Tuesday morning, he told Sky News, “We’re waking up to a very grim day in Europe.

I believe the invasion of Ukraine has started since we can already see him sending in tanks and men.”

In an emergency meeting of the Cobra committee on Tuesday morning, Boris Johnson presided over the UK’s reaction to the crisis.

Nikkei dipped 1.7%, Hong Kong’s Hang Seng plummeted 2.9%, Shanghai Composite Index dropped 1.1%, and South Korea’s Kospi dropped 1.35 % in Asia.

US Energy Information Administration (EIA) statistics show that Russia is the world’s third-largest producer of oil behind the United States and Saudi Arabia, with a production level of 10.5 million barrels a day, or roughly 11 percent of the world’s total.

According to experts at commodities data and analytics company Kpler, the “ramifications on global energy markets are enormous” and the price movements Thursday, as well as those witnessed in previous weeks “go some way to reflect this,” according to a market report.

Russian banks were not blacklisted, however, and this may have disrupted crude deliveries, according to experts.

According to Reuters, citing four trade sources, at least three big importers of Russian oil have been unable to secure letters of credit from Western banks to fund purchases due to the uncertainties associated with Russia’s invasion of Ukraine. When the seller’s bank gets a letter of credit from the bank, they may rest assured that they’ll be paid on schedule and in full.

The Effect Of Russia-Ukraine War On The Crypto Market

As the war between Russia and Ukraine worsens, the value of key cryptocurrencies is plummeting. Other major digital currencies, such as Ethereum and Solana, have also seen their value fall lately, with bitcoin falling to $36,370 on Tuesday.

Bitbank’s Japanese crypto market analyst Yuya Hasegawa said in a research note that “Bitcoin’s safe haven narrative has almost totally come apart as the increased threat of armed confrontation and the deteriorating U.S.-Russia relationship puts the broader financial market in risk-aversion mode.”

The turmoil in Ukraine has prompted stock prices to plummet on Wall Street, where investors have sought safety. This year’s high gold price was $1,907 an ounce on Tuesday. U.S. government bonds are also seeing a surge in demand from investors, increasing the price of the bonds while simultaneously lowering their yields.

During a press conference on Tuesday afternoon, Vice President Joe Biden announced further sanctions against Russia as a reaction to Vladimir Putin’s decision to deploy troops into Ukraine’s eastern breakaway territories. According to Mr. Biden, the sanctions would target Russia’s two largest banks and its sovereign debt in close coordination with allies and partners this site Says.

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