Oil rises after US and UK ban Russian imports

Oil benchmarks rose and commodity prices climbed after the US and UK agreed to ban Russian oil and gas imports to punish Vladimir Putin for the invasion of Ukraine.

Brent crude, the international benchmark, rose as much as 2 per cent to $ 130.48 a barrel, while US marker West Texas Intermediate jumped as much as 2.2 per cent to $ 126.44.

Both contracts closed Tuesday’s session up more than 3 per cent after President Joe Biden banned imports of Russian oil and gas into the US. The move was matched by the UK’s phaseout of Russian oil imports while the EU decided to cut Russian gas imports by two-thirds within a year.

“Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to Putin’s war machine,” Biden said.

The ban on US and UK imports marks the latest escalation in sanctions on Russia over its invasion, which has rocked global commodities markets. The S&P 500 closed at its lowest level since June 2021 on Tuesday as commodity prices surge to record highs on fears of large-scale, sustained disruption.

European natural gas contracts have risen by more than 200 per cent over concerns that Russian supply could be cut off. The disruptions to wheat exports from Ukraine and Russia have sent wheat futures almost two-thirds higher.

Paul McTaggart, head of research for Australia and New Zealand at Citi, said commodity markets had “fundamentally changed” as the bank raised its 2022 forecast for Brent by 24 per cent to $ 89 to reflect expectations of sustained upward pressure. He added that “longer-term, the shift in NATO-Russian relations may have wide-ranging impacts, including on relations with China”.

Nickel prices in China rose the maximum of 17 per cent to Rmb267,700 (about $ 42,400) a tonne on Wednesday, after the London Metal Exchange suspended trading in its main contract for the metal on Tuesday, when a bad bet placed by a Chinese metals tycoon sent prices surging above a record $ 100,000 a tonne.

In equities, Asian markets were edging up in morning trading after a series of punishing falls. Hong Kong’s Hang Seng index rose 0.7 per cent while China’s CSI 300 climbed 0.6 per cent and Japan’s Topix gained 1 per cent.

Futures tipped European stocks to follow Asia higher, with the Euro Stoxx 50 set to rise 1.5 per cent and the FTSE 100 expected to gain 1.2 per cent. The S&P 500 was expected to rise 0.4 per cent after closing down 0.7 per cent lower on Monday.

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