Oil rose above the $100 mark and Asian stocks sold off on Wednesday after Russia stepped up its attacks on Ukraine’s biggest cities and adopted more aggressive tactics.
Brent crude, the international benchmark, rose 4.4% to a seven-year high of $109.59 a barrel at the start of Asian trading, while US marker West Texas Intermediate climbed 4.7% at $108.29.
The latest oil gains, which have left Brent rising almost 16% since Russian President Vladimir Putin launched his invasion, came as Russia stepped up its bombardment of Ukraine’s biggest cities.
Sanctions imposed on Russia by Western countries have sought to sidestep the energy sector, but nonetheless fueled volatility in global markets due to concerns over supply disruptions. But U.S. energy group ExxonMobil said on Tuesday it would quit Russian oil and gas operations, marking the latest corporate exit in response to the invasion.
Joe Biden has also come under increasing pressure to ban Russian oil imports, with Republicans and Democrats calling on the US president to cut energy ties with the Kremlin. In his State of the Union address on Tuesday, Biden expressed support for punitive measures against Russia, but stressed that controlling prices was his “top priority.”
“The Russian-Ukrainian conflict is likely to continue to dominate markets for the foreseeable future,” said Robert Carnell, head of Asia-Pacific research at ING. “Yesterday’s announcement that Russia will not pay coupons to foreign holders on its public debt should push investors further into safe havens.”
In Asian markets, equities sold off, dragged down by a 1.7% drop in the Japanese benchmark Topix index. China’s CSI 300 index of stocks listed in Shanghai and Shenzhen fell 1%, while Hong Kong’s Hang Seng index lost 0.6%.
The falls followed steep declines on Wall Street, where the S&P 500 and the tech-focused Nasdaq Composite fell 1.6%. Futures tipped the S&P 500 up 0.1% on Wednesday, while the Euro Stoxx 50 was expected to fall 0.1% after ending Tuesday’s session down 2.4%.
In sovereign bond markets, yields on US Treasuries stabilized after rebounding on Tuesday as investors sought safe havens to cushion falling stock prices. The 10-year US Treasury yield rose 0.03 percentage points to 1.7565 after falling nearly 0.1 percentage points in the previous session.
In currencies, the ruble has stabilized at around 108 against the dollar after a brutal rout this week that left it down almost 30% since the start of the invasion.