The threat of a possible ban on Russian oil imports sent the price of Brent Crude to its highest price since 2008 this morning and natural gas jumped to an all-time high.
Brent Crude reached $139 a barrel at one point, the highest since the financial crisis and 20% higher than it was on Friday.UK natural gas smashed records to hit 800p a therm this morning, before falling back.
The previous record high was 485p. Gas was changing hands at around 47p a therm this time last year.
Energy prices jumped after US Secretarty of State Antony Blinken said he was discussing a possible embargo on Russian oil in over war in Ukraine.
Bank of America chief economist Ethan Harris said cutting off most of Russia’s energy exports would be a “major shock to global markets”, and said the loss of Russia’s five million barrels could see oil prices reach $200 a barrel.
Vandana Hari at oil markets firm Vanda Insights said: “While the US might just push through a ban on Russian oil imports, Europe can ill-afford to do the same.”UK petrol prices are up 10% in a week to about 157p a litre and could rise as high as £1.75 before long, some predict.
RAC fuel spokesman Simon Williams said: “These hikes are unprecedented and will sadly be hitting both homes and businesses hard.”
Pressure group FairFuel said: “Pump prices are set to cripple the economy and the cost of living.”The relentless march higher for energy prices is leading to fears of stagflation: stagnant economic growth combined with escalating price rises.
Richard Hunter at interactive investor said: “The current backdrop is stoking stagflation concerns, with rising inflationary pressure unlikely to be offset by sufficient global economic growth to prevent a stagnant environment. Central banks may need to consider reining in their increasingly hawkish attitudes to interest rates in light of a further blow to global economic recovery.”
Simon French, chief economist at Panmure Gordon, said whether stagflation comes to pass or not: “It will feel like a recession for most households.”
The FTSE 100 dropped another 100 points today, knocking around £25 billion off the value of the index.
UBS today told its clients it was no longer recommending they buy European stocks, citing “heightened uncertainty and the potential for negative economic and earnings growth revisions in the region.”
In Russia, the stock market remains suspended. Visa, Mastercard and American Express have suspended operations.