[End of the World is Near]: Brent crude hits $130 a barrel; Markets plunges.

[yong]

https://asia.nikkei.com/Business/Market ... 1&si=44594

Brent crude hits $130 a barrel; Nikkei plunges
U.S., Europe ban on Russian products and delayed Iran nuclear talks spark fears


Brent was quoted $12.73 higher at $130.84, while U.S. crude rose $9.92 to $125.60. © Reuters
March 7, 2022 09:12 JSTUpdated on March 7, 2022 11:54 JST

SYDNEY (Reuters) -- Oil prices soared and shares sank in hectic trading on Monday as the risk of a U.S. and European ban on Russian products and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets.

The euro extended its slide, hitting parity against the safe haven Swiss franc, and commodities of all stripes were on the rise as the Russian-Ukraine conflict showed no sign of cooling.

Russia calls the campaign it launched on Feb. 24 a "special military operation", saying it has no plans to occupy Ukraine.

Having surged more than 10% in wild early action, Brent was last quoted $7.90 higher at $126.01, while U.S. crude rose $6.67 to $122.35.

That jump will act as a tax on consumers and the potential blow to global economic growth saw S&P 500 stock futures drop 1.5%, while Nasdaq futures shed 1.9%. U.S. 10-year bond yields also dropped to their lowest since early January.

EUROSTOXX 50 futures dived 3% and FTSE futures 2.5%.

Japan's Nikkei sank 3.2%, while MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.6%. Chinese blue chips shed 0.8% amid a sea of red across Asian markets.

Having climbed 21% last week, Brent crude was further energized by the risk of a ban of Russian oil by the United States and Europe. Read full story

"If the West cuts off most of Russia's energy exports it would be a major shock to global markets," said BofA chief economist Ethan Harris.

He estimates the loss of Russia's 5 million barrels could see oil prices double to $200 a barrel and lower economic growth globally.

And it is not just oil, with commodity prices having their strongest start to any year since 1915, says BofA. Among the many movers last week, nickel rose 19%, aluminium 15%, zinc 12%, and copper 8%, while wheat futures surged 60% and corn 15%.

That will only add to the global inflationary pulse with U.S. consumer price data this week expected to show annual growth at a stratospheric 7.9%, and the core measure at 6.4%.

All of which complicates the policy picture for the European Central Bank when it meets this week.

"Given the potential for stagflation is very real, the ECB is likely to maintain maximum flexibility with its asset purchase program at 20 billion euros through Q2 and potentially beyond, thus effectively pushing out the timing of rate hikes," said Tapas Strickland, an economist at NAB.

"Higher CPI forecasts, though, mean rate hikes will be needed on the horizon."

The near-term prospect of a more dovish ECB combined with safe-haven flows to drive German 10-year bond yields down a huge 32 basis points last week. U.S. 10-year yields were down at 1.69%, having already dropped 23 basis points last week.

Fed fund futures were also gaining as the market priced in a slower pace of rate rises from the Federal Reserve this year, though a March hike is still seen as a done deal.

With the outlook for European growth darkening, the single currency took a beating and fell 3% last week to its lowest since mid-2020. It was last down 0.8% at $1.0834 and in danger of testing its 2020 trough around $1.0635.

The euro was also tumbling against the Swiss franc to break under 1.0000 for the first time since early 2015.

The dollar was broadly firmer, supported in part by a strong payrolls report which only reaffirmed market expectations for a Fed hike this month. The dollar index was last at 99.134 having climbed 2.3% last week.

"Events in the Ukraine are increasingly overwhelming the euro," said Richard Franulovich, head of FX strategy a Westpac.

"With safe-haven flows likely to continue for some time yet and Fed officials eager to press on with their policy normalization plans, 100+ for (the dollar index) is just a matter of time."

Gold benefited from its status as one of the oldest of safe harbors and was last up 1.1% at $1,991 an ounce.

[Doc67]

Plus the cost of fertilizer which uses a lot of natural gas to make. Russia and China are about 25% of global production, so if Russian gas can't be bought, and nor can the west buy their fertilizer, the price of what fertilizer is available will continue to go to further highs. China, faced with such high prices might decide to withhold exports to drive the prices higher.

Plus all the wheat from Russia and Ukraine we can't but any more.

Loaf of bread soon to be $5. Domestic gas bills doubling. Vehicle fuel (petrol/gas) up 50%+. Watch that play havoc with inflation figures which means higher interest rates which means people with crazy high mortgages are going to get a hell of a shock.

And we thought Covid was bad...

[nemo]

This is just the beginning. They could embargo oil from either side.

[Bitte_Kein_Lexus]

We're still due for a recession so...

[Jerry Atrick]

Loaf of bread soon to be $5. Domestic gas bills doubling. Vehicle fuel (petrol/gas) up 50%+. Watch that play havoc with inflation figures which means higher interest rates which means people with crazy high mortgages are going to get a hell of a shock.

And we thought Covid was bad...

It was coming one way or another

[Tootsfriend]

Plus the cost of fertilizer which uses a lot of natural gas to make. Russia and China are about 25% of global production, so if Russian gas can't be bought, and nor can the west buy their fertilizer, the price of what fertilizer is available will continue to go to further highs. China, faced with such high prices might decide to withhold exports to drive the prices higher.

Plus all the wheat from Russia and Ukraine we can't but any more.

Loaf of bread soon to be $5. Domestic gas bills doubling. Vehicle fuel (petrol/gas) up 50%+. Watch that play havoc with inflation figures which means higher interest rates which means people with crazy high mortgages are going to get a hell of a shock.

And we thought Covid was bad...

We are lucky the bullshit that is used for a fertilizer has not gone up in price.

[Kammekor]

Domestic gas bills doubling. Vehicle fuel (petrol/gas) up 50%+.

Since quite a large portion of the price of petrol and gas is made off taxes governments have a knob to turn to reduce the pain.

[Doc67]

Domestic gas bills doubling. Vehicle fuel (petrol/gas) up 50%+.

Since quite a large portion of the price of petrol and gas is made off taxes governments have a knob to turn to reduce the pain.

Well, this is now a hot topic in the UK. About 60% of the price of petrol/diesel is duties and VAT. These price spikes are producing a huge VAT windfall, £billions, which could be given back by cutting the rate from 20% to 10%.

Will they do it? I rate the chances at >25%

[Kammekor]

Domestic gas bills doubling. Vehicle fuel (petrol/gas) up 50%+.

Since quite a large portion of the price of petrol and gas is made off taxes governments have a knob to turn to reduce the pain.

Well, this is now a hot topic in the UK. About 60% of the price of petrol/diesel is duties and VAT. These price spikes are producing a huge VAT windfall, £billions, which could be given back by cutting the rate from 20% to 10%.

Will they do it? I rate the chances at >25%

Not yet, but if it really starts to hurt....

[Cooldude]

https://www.shell.co.uk/sustainability/ ... ramme.html

I think it's ironic that the world still uses North Sea Brent as one of its benchmarks when there's only one platform left in the field and is barely limping along. The others haven't produced a drop of oil in years and have been decommissioned.