Oil prices rose on Thursday due to tensions surrounding key producer Russia, while global equities mostly rose as markets digested central bank monetary tightening moves.
The price of the benchmark oil contract, Brent North Sea crude, jumped more than 8% to break through $100 per barrel after Russia rejected a ruling by the UN’s highest court to halt its Ukraine offensive.
“Russia’s invasion is still dictating price action… given the country’s global importance in terms of supply,” AFP quoted Interactive Investor analyst Victoria Scholar as saying.
The rise in oil prices has exacerbated concerns about inflation, prompting the OECD to warn on Thursday that the fallout from the conflict could reduce global economic growth by more than one percentage point in the first year after the invasion.
Despite accounting for “about 2%” of the global economy, Russia and Ukraine’s importance as exporters of raw materials, food, and energy means the conflict’s impact will be felt beyond their borders, according to the OECD grouping of developed economies.
“If sustained,” the impact would cause “a deep recession in Russia” and raise global consumer price inflation by approximately 2.5 percentage points, according to the report.
The warning came as Russia’s finance ministry announced that it had made interest payments on two foreign bonds, avoiding a default for the time being after being hit with unprecedented Western sanctions.
Following the decision of the US Federal Reserve, the Bank of England (BoE) raised its main interest rate by a quarter point.
The hike, which was widely anticipated by analysts, was the Bank of England’s third in a row as it battles decades-high UK inflation.
“The global economy is facing elevated levels of inflation due to a variety of factors, including surging energy and commodity prices,” said Fawad Razaqzada, an analyst at ThinkMarkets.
However, US stocks continued their strong rally, with the Dow posting its third straight session of gains of more than 1%.
Higher oil prices typically weigh on the broader equity market, but analysts say stocks have continued to benefit from positive momentum.
Earlier, London finished 1.2 percent higher, but the German DAX fell 0.4 percent, while Paris edged slightly higher.
In Asia, Hong Kong’s main Hang Seng index closed with another massive gain, up 7%, as investors re-entered the market following China’s pledge to support markets.
China’s top economic official has promised to support battered markets and has hinted that a crippling crackdown on the technology sector is coming to an end.
“The statement addressed so many issues on so many fronts, which is very unusual,” said Ding Shuang of Standard Chartered.
