After three days of losses, European market indices recovered some ground in early trade on Wednesday, as crude prices increased after the United States’ ban on Russian oil imports.
In reaction to Russia’s invasion of Ukraine, Western sanctions have shut Moscow off from global commerce and financial markets, and oil prices have barely nudged higher since the US ban, which Goldman Sachs analysts said had already been factored in.
Brent crude futures were trading at $128.89 a barrel at 0815 GMT, up 0.6 percent on the day. While this was lower than Monday’s high of $139.13, it was more than double the lows of December.
The United Kingdom announced that it will stop importing Russian oil and oil products by the end of 2022, while the European Union announced intentions this year to reduce its reliance on Russian gas by two-thirds. The European Union is more reliant on Russian oil than the US.
Russia said it was working on a wide reaction to the sanctions that would be immediate and felt in the most sensitive areas of the West.
Key questions for investors, according to Marcelo Assalin, head of Emerging Market Debt at William Blair IM, are whether there will be more military escalation; whether Moscow will restrict its gas exports if countries like Germany join the oil buying ban; how the surge in energy prices will affect the global economy; and how major central banks will react.
Assalin predicts that central banks would tighten monetary policy ‘less than they would otherwise.’
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