Oil price surge weighs on business and households
A SURGE in oil prices after Europe unveiled plans for a ban on Russian imports within six months heaped more pressure on companies and households today.
Brent Crude futures jumped 3.5% to $108.56 a barrel as European Commission president Ursula von der Leyen unveiled the bloc’s sixth set of sanctions targeting Russia.
She pledged to phase out the use of the country’s oil in an orderly fashion that minimises disruption for global markets: “Let us be clear: it will not be easy. But we simply have to work on it.”
As almost two-thirds of the bloc’s crude oil imports came from Russia in 2019, the move reignited the Brent price after China’s zero-Covid policies had begun to weigh heavily on the demand outlook.
UBS thinks the market is underpricing the energy supply risks and expects Brent Crude to trade around $115 a barrel. This will do little to alleviate the price pressures squeezing margins and sapping consumer confidence.
BP and Shell were predictable beneficiaries of the oil price rise, with their shares up more than 1% today.
BP, which yesterday reported a bigger-than-expected share buyback and its highest quarterly profit since 2008, rose another 4.85p to 419.1p.
The FTSE 100 index drifted 24.59 points to 7536.74, with consumer uncertainty created by record levels of inflation reflected in falls of 3% and more for B&Q owner Kingfisher, JD Sports Fashion and Primark business AB Foods.
It was a similar story outside the top flight as the UK-focused FTSE 250 index lost more than 1%, down 227.79 points to 20,292.97 after heavy falls of 4% for Currys and Mike Ashley’s Frasers Group.
Joules shares tumbled 36% or 19.7p to 35.3p on AIM after the lifestyle retailer reported a squeeze on margins as sales become promotionally driven. Alongside profits below expectations, it said chief executive Nick Jones is due to leave this year.