Author: Highstreet
The blue fuel was trading at around $1,000 yesterday. After the start of the military operation in Ukraine, this 35 percent spike was reported in barely one hour of trade (Feb 24). At the start of the day, European markets suffered a significant drop. Brent crude oil prices for April trades increased to $105 per barrel.
Wheat prices in European trade jumped to 344 euros per tonne, owing to the fact that Ukraine and Russia are two of the world's largest producers. After the rouble's value plummeted to a new low versus the dollar and the euro, Russia's Central Bank decided to interfere in the foreign exchange market.
Tsvetoslav Tsachev, a stock market analyst, told BNT that the biggest risk, if there are severe sanctions against Russia, is that Europe's GDP will contract by 1 to 2 percent this year.
"The issue is that we have no idea how severe the consequences will be. I believe they will be determined by how quickly the Russian army advances, because if substantial opposition develops in Ukraine, Europe will have the luxury of implementing tougher sanctions "BNT spoke with Tsvetoslav Tsachev.
In terms of stock markets, Tsachev stated that Europe has witnessed a 4-5 percent decline in indexes and that they may be reacting to yesterday's news regarding the US market, which saw significant losses.
"What we're seeing across the board is really typical. Risk assets are being sold, and assets that provide capital protection, such as bonds and gold, are being purchased. Whenever such circumstances occur, the dollar comes out on top "Tsachev elaborated.
He also noted that, despite a large increase in gas prices on European markets, prices have not yet hit their recent high of 1,600 euros. It is still impossible to predict how the market would react if gas deliveries to Europe are halted.