PARIS, March 22 (NNN-AGENCIES) — Oil prices extended their rally Tuesday on supply worries as European leaders debated banning imports from Russia, though equities stood their ground despite a tepid Wall Street lead and the prospect of a sharper hike in US interest rates.
Both main crude contracts started the week by soaring more than seven percent Monday as EU nations discussed following Washington putting an embargo on Russian energy imports for its war in Ukraine.
Some members are pushing to ramp up pressure on Vladimir Putin with more sanctions over his invasion, though others including Germany — which still relies on Moscow’s fuel — have been reluctant to target the key sectors.
Adding to upward pressure on oil was a warning from Saudi Arabia that Yemeni rebel attacks on its oil facilities pose a “direct threat” to global supplies, after Red Sea facilities belonging to oil giant Saudi Aramco were targeted.
The surge in oil prices has been a key driver of turmoil on world markets in recent weeks as demand surges owing to economic reopenings just as supplies are strained. That, along with a spike in the cost of other key commodities such as metals and wheat caused by the war, has sent inflation rocketing and caused a headache for central banks already trying to wind down pandemic-era monetary policy.
There is a growing fear that the global economy could endure a period of stagflation in which prices soar by growth stalls.
And the Fed chair Jerome Powell on Monday indicated the bank could hike rates at a faster rate to keep a leash on inflation, less than a week after it announced what is expected to be a number of increases this year.
While Wall Street ended on a negative, equities remained resilient in Asia.
Hong Kong was back on the rise after last week’s blockbuster surge as Chinese authorities reiterated a pledge to support markets and the stuttering economy.
Tokyo returned from a long weekend to pile on more than one percent, helped by a drop in the yen to a new six-year low against the dollar, which helps exporters.
Shanghai, Sydney, Seoul, Manila, Jakarta and Wellington also rose, though Singapore and Taipei struggled.
China Eastern Airlines sank six percent in Shanghai and four percent in Hong Kong after one of its jets crashed in China carrying 132 people, having dropped more than 20,000 feet in just over a minute. — NNN-AGENCIES
