Oil and gold prices went up after Russian President Vladimir Putin said that he would recognise two self-proclaimed separatist republics in eastern Ukraine and send “peacekeeping forces” to the area, which would make the conflict much worse.
When the market didn’t work on Monday, West Texas Intermediate rose more than 3% from Friday to above $93 per barrel. Gold hit an eight-month high as well. There was no word on how many Russian troops might be sent into the country or when they might come. Moscow has said that Ukraine has put a lot of its own troops on the front lines with separatists in the Donetsk and Luhansk regions.
It’s because of geopolitical tensions in Eastern Europe and the Middle East that the markets have been shaken up. Oil prices are now close to $100 a barrel. A war in Ukraine or sanctions in response could stop the flow of goods like oil, gas, aluminium, and wheat. Rising demand and shrinking global crude and petroleum product inventories have pushed the prices up. As the nuclear talks with Iran go on, there are still hopes that Iran will be able to provide more oil.
A senior market analyst at Oanda Asia Pacific Pte. says that Ukraine will be the main source of short-term volatility this week. The price of oil will rise above $130 if the tanks cross the border into Ukraine.” “That would be bad for stocks, but good for gold,” says the person.
During times of geopolitical turmoil, gold rose because it was a safe haven. Cryptocurrencies fell, which weakened the argument that they could do the same thing. Bitcoin fell below $40,000 over the weekend, and it kept going down as the Ukraine crisis got worse.
Futures for wheat in Chicago rose close to a one-month high when trading began again after a holiday in the United States. Russia and Ukraine make up one-quarter of the world’s grain trade and one-fifth of the world’s corn sales. As food prices around the world have already hit a decade high, there is a lot of fear that the situation could get even worse.
Russia will say that Vladimir Putin’s decision to recognise the regions as part of Ukraine makes it legal for its troops to be there. This will likely make the United States and other countries more worried that Russia is trying to take over territory that other countries recognise as part of Ukraine. Another important United Nations body, the UN Security Council, is meeting in an emergency session to talk about Ukraine.
The Biden administration has said that Russia’s buildup of troops near Ukraine is a sign of an invasion, which the Kremlin has always denied. Following Putin’s recent actions, the United States is moving all of its State Department staff and its embassy from Ukraine to Poland for safety reasons. As long as Russia doesn’t invade, US officials say that the people who work there will come back to the US on Tuesday morning.
Another reason for the price of oil to go up: Saudi Aramco said it sees signs of more demand in Asia. It’s said that some of OPEC+’s biggest producers want the group to keep up with its plan and add another 400,000 barrels of crude to the market each day in April. There have been calls for OPEC and other oil producers to produce more quickly in the face of low oil prices.