President Putin announced a “military operation” in eastern Ukraine, sending oil prices above $100 for the first time in more than seven years. Asian stock markets also fell by 2 to 3 percent as a result of the news. Markets have been hammered in recent days as tensions have risen; prices touched $98 just a few days ago after Mr. Putin ripped up a peace plan and sent troops into two rebel-held eastern districts.
Investors have been flocking to what they consider safe-haven investments, according to BBC Asia business correspondent Mariko Oi. Gold prices have risen to their highest level in almost a year, while the US dollar and the Japanese yen have strengthened as well. As a result, the US and Europe have threatened to impose the strongest penalties on Russia. “Supply disruptions cannot be ruled out if sanctions impair payment transactions, Russian banks, and maybe also the insurance that protects Russian oil and gas supplies,” said Commerzbank analyst Carsten Fritsch.
According to Reuters, at least three large buyers of Russian oil were unable to obtain letters of credit from Western banks to finance purchases on Thursday. Brent crude was trading at $104.10 US a barrel on Thursday morning, up $7.26 US, or 7.5 percent, after hitting a high of $105.79 US. The North American benchmark price, West Texas Intermediate (WTI), increased by $6.63 US, or 7.2 percent, to $98.73 US. Brent and WTI both touched new highs since August and July of last year, respectively.
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