Global crude oil prices rebounded early on Friday after sliding during a volatile previous session, having initially soared to multi-decade highs on Thursday as the escalation in the Russia-Ukraine war concerns of runaway inflation.
Oil markets were volatile on supply disruptions due to the sanctions on Russia in the previous session, with Russian exports at 4 to 5 million barrels per day more than any other nation other than Saudi Arabia.
The international benchmark for oil – Brent crude futures, rose to within 16 cents of $120 a barrel – highest since 2012, before falling to settle at around $110, on hopes the United States and Iran will agree soon to a nuclear deal that could add output to a badly undersupplied market.
But Brent crude oil futures rebounded to gain over 1.5 per cent to $112 early on Thursday as supply concerns still and on expectations of Russia’s war in Ukraine could hit the global economy from higher prices to dampened spending and investment.
Analysts also said an Iran deal would not replace Russia’s disruptions.
Markets are volatile, leading investors to try to figure out a lot of moving parts “in one fell swoop,” Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management, told Reuters.
Commodities’ prices have also tracked higher oil prices. Everything from coal to natural gas and aluminum surging as sanctions on Russia following its invasion of Ukraine start to distort supply.
“Russia was the second-largest crude producer globally in 2020…In 2020, Russia was also the third-largest aluminum producer…and the third-largest nickel producer analyst…in the world,” noteds at Motilal Oswal Institutional Equities.
“We believe the sanctions on Russia will impact the prices of aluminum, nickel, steel, thermal coal, and PCI coal positively. In addition, it will lead to cost escalations because of alternative sourcing, delays in establishing new sources, delays in payments and consequent deferrals in shipment releases, among others,” they added.
Asian markets suffered heavy losses, while gold prices jumped on the stocking worsening Russia-Ukraine conflict.
Tracking a sell-off in global equity markets, Indian shares fell sharply on Friday, as the escalating Ukraine crisis has stoked inflation and growth fears.