Global oil stocks slide as Ukraine fears escalate
Major oil stocks sank as rising tensions between russia and Ukraine threatened international crude supplies.
Brent crude dropped by over 1.1pc to just above $88 a barrel as the ongoing build-up of russian troops on the Ukrainian border drew condemnation from politicians in both the US and Europe.
There are worries that a russian invasion of Ukraine will result in sanctions from the US and other countries in retaliation, which could impact supplies of russian oil and gas to the wider market.
Such a move would come at a critical time for global oil supplies, which are currently tight as the economy emerges from the pandemic and fuel demand rises while production remains steady.
It could also imperil projects run by UK oil majors Shell and BP, both of which have operations in russia. Shell shares dropped 1.7pc, or 30.8p, to 1808.4p as crude prices dipped while BP was down 1.8pc, or 6.9p, at 382.25p.
Neil Wilson, chief market analyst at Markets, noted that a full-scale war between russia and Ukraine would also cause ‘heavy losses’ for global stock markets.
The oil stock declines helped push the FTSE 100 into negative territory for 2022 so far, ending the week on a sour note. The bluechip index closed down 1.2pc, or 90.88 points, at 7494.13.
The FTSE 250 was also on the back foot, tumbling almost 2pc, or 451.74 points, to 22263.24.
Markets in Europe and asia also saw heavy losses yesterday, with Germany’s Dax dropping 1.9pc, while japan’s Nikkei index slumped 0.9pc.
Market sentiment was weighed down by jitters on Wall Street as a sell-off of tech firms continued. It has been especially punishing for Scottish Mortgage Investment Trust, which counts tech giants such as Tesla and Nvidia among its biggest holdings. Shares in the group were down 3.9pc, or 44.5p, to 1109.5p.
It was followed by other USfocused funds, with Baillie Gifford US Growth Trust sliding 6.7pc, or 16.5p, to 230.5p while Allianz Technology Trust, which owns a large stake in Google parent alphabet, tanked 5.5pc, or 16p, to 277p.
retailers also fell as sales tumbled by almost 4pc in December as Plan B restrictions and omicron infections slammed the brakes on Christmas spending.
High street giant Next slumped 1pc, or 72p, to 7486p while Dunelm dropped 2.9pc, or 39p, to 1292p, B&M fell 2pc, or 10.8p, to 543p and JD Sports slipped 1pc, or 1.95p, to 192.7p.
The cautious market mood helped push up prices of some ‘defensive’ stocks, ones with slower share price growth but more reliable dividend payments.
Lucky Strike cigarette maker BAT climbed 0.8pc, or 24.5p, to 3138p and rival Imperial Brands rose 0.4pc, or 6.5p, to 1731p.
Promotional merchandise maker 4imprint edged up 1.7pc, or 45p, to 2675p after upping its profit forecasts. The FTSE 250 firm expects profits for 2021 to be ‘towards the upper end’ of expectations, while revenues for the period are due to rise 41pc yearon-year to £580m.
Mid-cap merchant bank Close Brothers flagged an expected 2.9pc rise in its loan book to £8.7bn for the six months to the end of january, boosted by new business in its asset and motor finance divisions. assets under management also grew to £16.6bn from £15.6bn at the end of july last year. Shares sank 6.1pc, or 82p, to 1266p.
Ladbrokes-owner Entain dropped 5.2pc, or 89p, to 1635p after receiving a mixed reception from two investment banks.
analysts at Morgan Stanley upped their target price on the stock to 2530p from 2430p previously, while Deutsche Bank cut theirs to 2354p from 2400p.