A recent news article published in the Platts states that the crude oil futures extend climb in Asia after Putin puts troops in Ukraine’s breakaway regions.
Crude oil futures continued its steep ascend in mid-morning Asian trade Feb. 22 after Russian President Vladimir Putin ordered troops on a “peacekeeping mission” into breakaway regions in Ukraine in an escalation of the Russia-Ukraine tensions.
At 10:31 am Singapore time (0231 GMT), the ICE April Brent futures contract was up $1.63/b (1.71%) from the previous close at $97.02/b, while the NYMEX March light sweet crude contract jumped $2.93/b (3.2%) from the Feb. 18 close at $94/b.
US markets are closed for the Presidents Day holiday over Feb 21-22.
Putin sends troops
Putin on Feb. 21 publicly recognized the Donetsk and Luhansk regions as breakaway states and sent troops into both regions to “keep the peace,” according to a government decree.
The two regions were already controlled by Russian-backed separatists prior to the incursion, though Western powers said the move could be a pretext for a further invasion into Ukraine.
“A re-escalating of geopolitical tensions in Eastern Europe dampened market sentiment, weighing on risk assets while buoying haven assets,” IG DailyFX strategist Margaret Yang said in a Feb. 22 note.
“The key risk is that the highly fluid situation created a large amount of uncertainty that investors dislike, adding to worries that this may unfold into a larger-scale crisis.”
US President Joe Biden Feb. 21 signed a executive order prohibiting “new investment, trade, and financing by [US individuals] to, from, or in the so-called DNR and LNR regions of Ukraine,” referring to the Donetsk People’s Republic and the Luhansk People’s Republic, respectively. Further US sanctions are set to be announced later Feb. 22.
European leaders have also agreed to impose sanctions targeting those responsible for Russia’s recognition of the breakaway regions, media reports indicated.
According to Suzanne Maloney, vice president of the Brookings Institution, the targeted sanctions are “just the start” as the crisis escalates, Platts reported eariler
Specific sanctions will depend on what happens next in the standoff, Paul Sheldon, chief geopolitical adviser for S&P Global Platts Analytics, said. “Anything less than an overt military incursion would depend on the circumstances,” he said.
The US has promised “swift and severe” measures in the event of an invasion. These are expected to target Russia’s major banks and the 55 Bcm/year Nord Stream 2 gas pipeline to Germany.
Analysts do not yet expect Western governments to impose energy sector sanctions, ban Russia from dollar trades or block access to the international financial messaging service SWIFT, both of which would have massive consequences for energy markets and the global economy.
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