Oil prices surged nearly 5 per cent and stock prices dipped after Russian President Vladimir Putin ordered forces into separatist regions of eastern Ukraine, bringing a long-feared invasion a step closer.

Russia is a major energy producer and tensions over Ukraine have brought wide swings in volatile energy prices, on top of the inevitable risks of a broader conflict.

Oil prices already had surged recently to their highest level since 2014. The price of Oman oil for April 2022 delivery rose today [Tuesday, 22 February] to touch US$96.51, thereby marking a US$4.27 increase over the price from Monday.

It was also noted that the average price of Oman oil for February Delivery 2022 had stabilised at US$73.14, which was only US$7.12 per barrel lower than January Delivery 2022.

By early today, the advance of US benchmark crude oil had abated slightly. It was up US$3.66, or 4.1 per cent, at US$93.87 per barrel in electronic trading on the New York Mercantile Exchange.

The price of Brent crude, the standard for international oils, gained US$2.71, or 2.9 per cent, to US$98.10 per barrel.

US trading was closed Monday for Presidents Day, but markets in Europe and Asia shuddered as Putin moved to secure Russia’s hold on Ukraine’s rebel regions, adding to fears of a full-scale invasion.

Those actions have undermined hopes for averting a conflict that could cause massive casualties, energy shortages on the continent, and economic chaos around the globe.

Germany’s DAX slipped 0.1 per cent to 14,719.16 and the CAC 40 in Paris was flat at 6,788.13. Britain’s FTSE 100 gave up 0.4 per cent to 7,452.18.

US futures were lower, with the contract for the S&P 500 down 0.1 per cent and the future for the Dow industrials 0.2 per cent lower.

So far, the biggest losses have been in Russia, where the MOEX index was down 3.5 per cent today after losing nearly 11 per cent on Monday. The ruble was 2.5 per cent lower.

In Asia, Tokyo’s Nikkei 225 index dropped 1.7 per cent to 26,449.61 while the Hang Seng in Hong Kong regained some lost ground to close 2.7 per cent lower at 23,520.00.

South Korea’s Kospi lost 1.4 per cent to 2,706.79 and the Shanghai Composite index fell 1 per cent to 3,457.15. Australia’s S&P/ASX 200 lost 1 per cent to 7,161.30.

The turmoil in Ukraine has upped uncertainty at a time when investors already are jittery over how the world’s central banks, especially the US Federal Reserve, will act to counter surging inflation while coronavirus outbreaks fueled by the highly contagious omicron variant cloud the outlook for many countries.

Higher oil prices complicate that situation.

Many Asian economies depend on oil and gas imports, and even if those don’t come from Russia, the spillover effects on world markets will raise energy costs at a time when countries are still barely recovering from the pandemic.

On other fronts, Treasury yields have been falling as investors shift money into the safety of US bonds. The yield on the 10-year Treasury, which affects rates on mortgages and other consumer loans, was at 1.9 per cent by early today, down from 1.93 per cent on Monday.

In currency trading, the US dollar rose to 114.80 Japanese yen from 114.74 yen late Monday. The euro climbed to US$1.1317 from US$1.1312.

US stocks capped a week of volatile trading with a broad sell-off on Friday.

The S&P 500 and Dow Jones Industrial Average both slipped 0.7 per cent. The Nasdaq composite bore the brunt of the selling, skidding 1.2 per cent. Small-company stocks also fell, with the Russell 2000 index down 0.9 per cent, the Associated Press (AP) news reported.

* This story was originally published on Oman News Agency