The mood on European share markets was no brighter at lunchtime on Thursday as losses were extended on a surging oil price in response to the growing impact of sanctions on Russia over its invasion of Ukraine.
The pan-regional Stoxx 600 index was down 0.41%. Oil & gas shares were in focus as Brent rose above $118 a barrel as sanctions imposed on Russia over its invasion of Ukraine fuelled worries about supply disruptions.
“(It’s) one-way traffic for oil as traders look beyond Russia for barrels,” said Markets.com analyst Neil Wilson. “Brent close to $120. Spreads between the front and back months are very wide, the backwardation pointing to extreme tightness in the market as traders search for anything but Russian crude.”
“I talked this week about how higher civilian casualties would pressure the West into banning Russian oil and gas exports; they may not need to. Self-sanctions are already playing a big role. Shell, BP ,Chevron (are) all exiting but traders and customers are swerving Russian oil without any sanctions needed.”
“SEB bank estimates that 70% of the 4-5m barrels of daily Russian exports is already in effective embargo; i.e. they can’t find buyers for their crude in the majority of sales. This is very important and would be considered a significant strategic win for the West, even if it does not feel that way for consumers.”
Metals miners were also in demand as prices rose, with BHP, Glencore, Anglo American and Antofagasta all rising.
However, Russian gold miner Polymetal continued its headlong spiral, as the company lost another third in value. The shares have fallen from 806p before the invasion to 203p on Thursday.
The global community’s willingness to impose restrictions on Russian firms and oligarchs has shaken the country’s financial system, with the rouble plunging to record lows on currency markets.
In other equity news, shares in London Stock Exchange Group gained 7.79% after it said applying financial sanctions on Russia would have only a minor impact on its business.
Germany’s Lufthansa slipped 5.4% after the airline said it could not provide a detailed outlook for 2022 due to the war in Ukraine and the pandemic. East Europe-focused budget carrier Wizz Air was down 5.63% on similar concerns.
UK broadcaster ITV slumped almost 18% on concern about its spending plans, despite surging annual profit.
British insurer Admiral fell 12.5% after a bigger-than-expected loss at its international division.
Melrose Industries shares fell as the company shelved a planned payout to shareholders because of concerns caused by the invasion of Ukraine.
Telecom Italia shares plummeted 13.85% after a record loss and plans to split the company.
