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Written by: Susannah Streeter | Hargreaves Lansdown
There is little sign the pedal is coming off the accelerator for energy prices, amid a fresh round of volatility that has hit markets after Russia moved to retaliate in the economic war being waged. Oil has climbed upwards again, with Brent crude marching back above $122 a barrel earlier as trade stays highly sensitive to the repercussions of the Ukraine conflict. The price of natural gas has dipped back slightly after roaring upwards on Wednesday after Moscow announced it will only accept payment for its exports in roubles, in a tit for tat move after its foreign currency reserves were frozen. But UK natural gas prices remain at 10 day highs.
Traders are on tenterhooks ahead of a meeting of G7 leaders and a NATO summit, with expectation that the military response will be beefed up through fresh weapons supply to Ukraine and that sanctions will also be tightened. But splits remain over deploying a serious blow to Moscow’s economic resilience by bringing in a European embargo to energy supplies, although an offer of more liquefied natural gas from the US would ease the transition away from reliance on Russia.
In the UK concerns stay elevated about the knock-on effect that soaring commodity prices will have on business resilience and consumer confidence, after the government’s fiscal plan was criticised for not offering enough medicine to ease the financial pain of higher prices. The small steps taken are individually welcome but together they don’t ease do much to ease the increasing burden of the cost of living and cost of commerce crises. Investors will be keeping a keen eye on the closely watched PMI numbers coming out this morning, giving a snapshot of activity in the private sector after a marked improvement in February as global supply issues eased. The worry is that these problems have ratcheted up again in recent weeks, although the effect of the easing of Covid restrictions across the economy should provide some support.
Related: Oil Jumps as Fresh Pessimism Hits Prospects for Peace and Supply Worries Rise