Free Trial

Talk Of Potential Russia Oil Embargo Rattles Markets


The commodity complex received a considerable boost as U.S. chief diplomat Blinken flagged ongoing talks with European allies on a potential embargo on Russian oil, despite reports of U.S.-led diplomatic efforts to court alternative suppliers. The surge in crude oil prices has given rise to broader stagflationary concerns, leaving risk appetite in tatters.

  • G10 FX space has been effectively split into two halves, with Europe spooked by the potential aggravation of military/humanitarian fallout from the Russo-Ukrainian war and the rest of the world mulling the impact of soaring commodity prices.
  • Regional contagion risk has pulled the rug from beneath Nordic currencies, with NOK finding little consolation in firmer oil prices. The euro has tumbled in concert with them, with EUR/CHF falling below parity for the first time since 2015.
  • Despite a sharp sell-off in EUR/CHF, Russia jitters have spread into Swiss franc, which underperforms all of its major peers from outside of continental Europe.
  • Commodity market dynamics have taken precedence in the Asia-Pacific, inspiring notable rallies in Antipodean currencies. On the other hand, a spike in commodity prices have generated a headwind for the yen.
  • The greenback (as measured by the DXY index) has extended its recent gains, printing best levels since mid-2020 as the new week got underway.
  • The Russian rouble was indicated sharply lower, hitting a fresh all-time trough. Rapid erosion in Russia's creditworthiness has amplified pressure from potential oil embargo, as Moody's cut the nation's credit rating to Ca from B3, with negative outlook.
  • Chinese trade data, German factory orders & retail sales, Norwegian industrial output as well as comments from BoE Dep Gov Cunliffe take focus from here.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.