Crude oil prices jumped while Asian stocks regained their footing on Wednesday as investors assessed the impact of a worsening conflict in Ukraine and a new U.S. ban on Russian oil.
The price of a barrel of crude, already on the march higher in January on supply worries and expectations of a strengthening global economic recovery, has rocketed upward since Russia launched its invasion of Ukraine on Feb. 24. Oil is now roughly double its early December low.
Risking even higher U.S. fuel prices, President Joe Biden on Tuesday imposed an immediate ban on Russian oil and other energy imports in retaliation for the invasion of Ukraine, amid strong support from American voters and lawmakers.
The ban caps sweeping U.S. and European sanctions imposed on Moscow for launching the largest war in Europe since World War Two. Russian strikes have targeted Ukrainian cities and killed hundreds of civilians.
Britain also announced it will phase out imports of Russian oil and oil products by the end of 2022.
"The oil shock by nature is an accruing one, not a one-off and the potential for the market to hit $150 before returning to $100 is easier for investors to digest," said Stephen Innes, managing partner at SPI Asset Management.
Putting in force sanctions without first developing surrogate
supply contingencies risks Brent crude much higher.
In morning trade in Asia, global benchmark Brent crude was trading at $130.31 per barrel, up 1.82% on the day but still off a peak of $139.13 touched on Monday.
U.S. West Texas Intermediate crude was up 1.41% at $125.45 per barrel.
Russia calls its actions a "special operation," and it said earlier this week that prices could surge to $300 a barrel and it could close the main gas pipeline to Germany if the West blocked its oil exports.
In equity markets, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was 0.80% higher, as Australia's resource-heavy ASX 200 (.AXJO) rose 1.14%.
China's blue-chip CSI300 index (.CSI300) was 0.47% higher, pulling back from stronger gains earlier after new inflation data reflected a combination of soft domestic demand and high commodity prices. read more
In Tokyo, the Nikkei (.N225) rose 1.1%.
The gains marked a turnaround after three sessions of sharp losses that pushed the MSCI index down more than 6% to its lowest level since late September.
They also followed another day in the red on Wall Street, where the Dow Jones Industrial Average (.DJI) fell 0.56%, the S&P 500 (.SPX) lost 0.72% and the Nasdaq Composite (.IXIC) dropped 0.28%.
"Markets remain volatile, unable to confidently price implications from the news flow given the complex state of the global economy," said Rodrigo Catril, senior FX strategist at National Australia Bank.
As equities took a breather, the dollar edged up 0.2% against the safe-haven yen to 115.89, and slipped 0.12% against a basket of its peers to 98.997.
The euro was 0.15% higher at $1.0915 and the rouble was last quoted at 122.5 to the greenback.
U.S. Treasury yields edged down, with benchmark 10-year notes last yielding 1.8577%, down from 1.871% late on Tuesday. The 2-year note last yielded 1.6129%, down from 1.629%.
Gold prices slipped from record highs, with spot gold falling 0.66% to $2,038.95 per ounce.