Commodity prices rise, stocks fall as US discusses Russian oil embargo

European stocks fell, commodities rose, and the euro hit its weakest level against the dollar in nearly two years after the United States said it was discussing a ban on oil imports from Russia.

The Stoxx 600 stock index, which fell 7 percent last week in its worst performance since March 2020, lost another 2.8 percent in early trading on Monday, after sharp declines in Asia.

The price of gold breached $2000 for the first time since August 2020 in Asian trading as investors sought to hedge against market risks in safe haven assets. The dollar index, which measures the greenback against six others, hit its highest point since May 2020. The euro fell 0.4 percent to $1.08, its weakest level against the dollar since May 2020.

Brent crude, the global benchmark, rose about 18 percent to $139.13 a barrel in early trading on Monday Highest level since 2008before paring gains to 9 percent at $128.68.

Global financial markets have been particularly volatile since late February, when Russian President Vladimir Putin launched a full-scale invasion of Ukraine. The additional crowding came on Monday as traders assessed the economic fallout for goods from the two producing nations pulled out of global supply chains.

US Secretary of State Anthony Blinken said on Sunday that Washington was in “very active discussions” with European allies. US House Speaker Nancy Pelosi said Congress is “looking” for legislation to ban the import of Russian oil.

“The world is completely unprepared for this shock,” said Robert Rainey, global head of market strategy at Westpac. He said it was not clear whether the US embargo would cover only oil or all Russian energy imports, but said the latter would have a “disastrous impact” on energy prices.

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In Russia, the ruble weakened to as much as 138.5 rupees against the dollar, setting a new record low for the Russian currency. The currency was trading at around 81 rupees to the dollar the day before the Russian invasion of Ukraine.

Hang Seng’s share in Hong Kong led the declines in Asia, falling 3.7 percent and on track for its lowest shutdown since the start of the coronavirus pandemic. The Nikkei 225 index in Tokyo was down 2.9 percent, its worst trading day since late January.

The prospect of expanded sanctions on Russian oil shipments has shaken up already volatile global commodity markets due to the growing difficulty of doing business with Russian suppliers. European natural gas futures rose 38.7 percent on Monday morning to 267 euros per megawatt-hour, a new all-time high. A year ago, the price was about 16 euros.

Other commodities, including palm oil and nickel, have reached high levels since the outbreak of the war. On Monday, palladium, a key ingredient in automobile catalytic converters, jumped 5.4 percent to a record high of more than $3,174 an ounce.

Wheat futures rose 7 percent to $12.94 a bushel.

In the Chinese markets, iron ore futures rose 7.6 percent to 874.50 renminbi ($138.53) per ton while nickel rose 12% to a record 210.950 renminbi per ton.

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