Oil price hits seven-year high as Vladimir puts Russia on war Putin footing

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Asian stocks dropped, Russian assets tumbled, and futures markets indicated falls for European stock markets and on Wall Street later in the day after Vladimir Putin ordered Russian troops into Ukraine.

Futures contracts tracking the regional Stoxx Europe 600 index fell 1.1 per cent, while those on the US benchmark S&P 500 dropped 1.3 per cent.

This came after heavy losses for stock markets across Asia, with Hong Kong’s benchmark Hang Seng index down almost 3 per cent, as the Russian president put the country on a war footing, forestalling attempts to find a diplomatic solution to the crisis.

Russia’s rouble hit its weakest level against the dollar in more than 15 months at 80.7. The Moex index of Russian stocks, which dropped 10.5 per cent on Monday, fell a further 9 per cent.

Brent crude, the international oil benchmark, rose as much as 2.4 per cent to $97.66 a barrel as traders calculated the possibility of sanctions against Russia, a major producer of the commodity as well as other natural resources.

“In the short term, we’re simply going to be trading the headlines,” said Robert Rennie, global head of market strategy at Sydney-based Westpac. “Obviously the headlines have taken a very ominous turn in the last few hours.”

Tokyo’s Nikkei 225 share index fell 1.7 per cent, South Korea’s Kospi lost 1.4 per cent and mainland China’s CSI 300 fell 1.3 per cent.

The yield on the 10-year US Treasury note fell 0.05 percentage points to 1.88 per cent, reflecting a significant rise in price for the benchmark instrument as traders seeking shelter from debt market volatility.

Moscow on Monday said it had destroyed Ukrainian military vehicles that entered Russian territory and Putin agreed to recognise two Moscow-backed separatist regions in eastern Ukraine.

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US Secretary of state Antony Blinken said’s decision to recognise the Russian-backed Donetsk and Luhansk people’s republics as independent was a “clear attack” on Ukraine’s sovereignty. A senior US official warned on Monday that a Russian invasion of Ukraine could be launched as early as in the “coming hours”.

The UK is expected to announce sanctions against Russia on Tuesday. Foreign Secretary Liz Truss said the measures would be imposed in response to Moscow’s “breach of international law and attack on Ukraine’s sovereignty and territorial integrity”.

The crisis in Ukraine has stoked volatility in global markets in weeks, driving up energy prices on concerns that supply chains could face severe disruption in the event of a conflict. Analysts at JPMorgan have estimated oil could hit $120 a barrel in the coming weeks if the crisis in Ukraine worsened.

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