BREAKING: Dow Tumbles As Oil Prices Surge
Russia’s invasion of Ukraine sent oil prices soaring Tuesday. However, market watchers expect OPEC+, which includes Russia among its partners, to keep its production increase steady when it meets Wednesday.
The U.S. and its Western allies ramped up their economic sanctions on Russia over the weekend, sending the ruble into free fall. Russia shut down its stock market Monday. And the central bank hiked its target interest rate from 9.5% to 20% as the U.S. moved to bar the bank from conducting transactions in U.S. dollars.
Investors worldwide are watching to see if and when tightening sanctions hit Russia’s energy sector. Or whether Russia will retaliate by withholding or rerouting oil and gas shipments.
Oil prices traded near multiyear highs ahead of Wednesday’s meeting of the Organization of Petroleum Exporting Countries. OPEC+ includes OPEC member countries and the group’s extended partnerships, led by Russia.
In futures markets, Europe’s North Sea benchmark Brent climbed 9% to $106.80 per barrel Tuesday. West Texas Intermediate soared over 10% to $105.58.
Multinational groups and global financial markets are quickly excising Russia as sanctions set in. Some Russian banks are now restricted from participating in the Society for Worldwide Interbank Financial Telecommunication — the Swift global bank communications payment system.
Additionally, the world soccer governing association, FIFA sports association, suspended the Russian soccer team from competition. The suspension comes only weeks before the World Cup qualifying matches. Earlier, Europe’s UEFA nixed St. Petersburg as the location for this year’s championship final.
LNG Stocks In Focus Amid Europe’s Energy Search, As Russia/Ukraine Sabers Rattle
Still, Saudi Arabia’s Crown Prince Mohammed bin Salman told French President Emmanuel Macron that he supports OPEC’s continued alliance with Russia.
“In this regard, his highness the crown prince affirmed the kingdom’s keenness on the stability and balance of oil markets and the kingdom’s commitment to the OPEC+ agreement,” a report from the Saudi Press Agency said.
Russia joined OPEC to create what is commonly referred to as OPEC+ in 2016 in an effort to support oil prices.
However, Russia’s struggling oil sector may limit its role in the expanded alliance. S&P Global Platts said in a recent report that the relationship was already on shaky ground. The group has been unable to expand production enough even to meet its own output targets.
And international pressure on Russia’s energy industry continues. BP (BP) announced Sunday that it’s exiting its nearly 20% stake in Russia’s Rosneft energy company. The stake is valued at $14 billion and BP could record charges of up to $25 billion on the decision.
Then on Monday, Shell (SHEL) said it would end its involvement in the Nord Stream 2 natural gas pipeline project. And Canada announced it would ban the import of Russian oil.
Despite rising oil prices, oil stocks were mixed Tuesday. BP’s U.S. listed shares tumbled 2.7% to 28.43. Shell fell 1% to 51.85. Exxon Mobil (XOM) was up 1.2% and Chevron (CVX) rose 2.9%.
Analysts largely expect OPEC+ to agree to continue its steady increase in crude supplies despite the jump in oil prices.
The group has raised its monthly output target by 400,000 barrels per day since August. That move came as it tries to assess fluctuating demand during the Covid-19 pandemic. The group has received pressure to increase that target and attempt to force oil prices lower. Meanwhile, the group has had mixed success in meeting even its current output goals.
Time The Market With IBD’s ETF Market Strategy
Whether or not OPEC+ responds to higher oil prices, the U.S. and its allies are moving to help prevent a supply crunch. Members of the International Energy Agency agreed to release 60 million barrels from oil reserves on Tuesday, with half the release coming from the U.S.’ Strategic Petroleum Reserve.
But the announcement had little impact on oil prices with U.S. oil prices surging to seven-year highs Tuesday.
Follow Gillian Rich on Twitter at @GillianRich_ for energy news and more.
YOU MIGHT BE INTERESTED IN:
Russia’s Ukraine Invasion Poses Big Economic Risks
Catch The Next Big Winning Stock With MarketSmith
Defense Stocks Climb As Europe, U.S. Promise More Military Aid To Ukraine
These Are The 5 Best Stocks To Buy And Watch Now
7:58 AM ET Energy stocks have gone up a lot already this year. Here’s how you can pick up this group leader at…
7:58 AM ET Energy stocks have gone up a lot already this year….
Get instant access to exclusive stock lists, expert market analysis and powerful tools with 2 months of IBD Digital for only $20!
Get market updates, educational videos, webinars, and stock analysis.
Learn how you can make more money with IBD’s investing tools, top-performing stock lists, and educational content.
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
*Real-time prices by Nasdaq Last Sale. Realtime quote and/or trade prices are not sourced from all markets.
Ownership data provided by Refinitiv and Estimates data provided by FactSet.
© 2000-2022 Investor’s Business Daily, LLC. All rights reserved
