Oil rises above $100 a barrel for the first time since 2014

Oil prices rose to $102 per barrel, futures pointed to heavy losses for European shares and the rouble fell to a record low after Russia’s president Vladimir Putin launched a military invasion of Ukraine.

Brent crude rose as much as 5.7 per cent, the first time the international benchmark has crossed the $100 threshold since 2014. West Texas Intermediate, the US marker, climbed almost 6 per cent to $97.30.

“If this situation continues to deteriorate I wouldn’t be surprised to see Brent at $120 a barrel, and that is really the point you’d expect to see co-ordinated intervention [by global suppliers],” said Robert Rennie, global head of market strategy at Westpac.

The military action in Ukraine has spurred investors to minimise losses by dumping risky assets in favour of havens.

Futures pointed to heavy losses for European shares, with the Euro Stoxx 50 set to drop almost 4 per cent at the open, while the FTSE 100 was expected to fall more than 2 per cent.

The S&P 500 was set to drop about 2 per cent after closing Wednesday’s session sharply lower. The tech-focused Nasdaq was expected to fall 2.7 per cent, putting the index on track to drop more than 20 per cent from its most recent peak and into a bear market.

Line chart of Brent crude ($/barrel) showing Russian invasion of Ukraine sends oil above $100 threshold

In Asia, Hong Kong’s benchmark Hang Seng index dropped more than 3 per cent and Japan’s Topix shed 1.3 per cent on Thursday. Investors said that simultaneous drops in the Tokyo-listed shares of technology group SoftBank, clothing company Fast Retailing and robot maker Fanuc was a signal that investors were panic-selling exchange traded funds that track Japan’s benchmark index.

Investors seeking refuge from share price falls piled into sovereign bond markets, driving down yields. The yield on 10-year US Treasuries fell 0.12 percentage points to 1.877 per cent.

The price of gold rose about 2 per cent higher to more than $1,939 per troy ounce.

As explosions were reported near Kyiv early Thursday morning, the Moscow Exchange announced trading in all markets had been suspended and gave no indication of when it would reopen.

Russian stocks have plunged in response to the crisis. The Moex index had been set to drop more than 11 per cent before the main trading session began on Thursday and has already fallen more than 18 per cent this year.

In currency markets, the military operation sparked a sell-off for the Russian rouble, which sank as much as 10.2 per cent to Rbs89.99 against the dollar, the lowest level on record, according to Bloomberg data. The euro also fell 0.6 per cent against the greenback to $1.1235.

The market moves in Asian trading came after Putin said he had ordered a military operation in Ukraine’s Donbas region that has been condemned by the US and many other European and western governments.

“All responsibility for the possible bloodshed will be fully and completely on the conscience of the ruling regime,” he said in an address broadcast on Russian state television.

Additional reporting by Leo Lewis in Tokyo

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