Connect with us


Powerful Sanctions Hit Risk Appetite



By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

We’re seeing widespread risk aversion once more on Monday after new severe sanctions were levied against Russia over the weekend.

The response to previous sanctions was underwhelming, to say the least, but the latest batch undoubtedly has the teeth that the others lacked. That’s been most clearly evident in the FX markets, where the rouble plunged more than 30% to record lows and that could have been much worse but for swift action by the central bank.

An emergency rate hike – raising the key rate from 9.5% to 20% – alongside other measures, has enabled the rouble to pare those initial losses but the currency remains under severe pressure. The latest sanctions are hard-hitting and will weigh heavily on the economy. And that’s before we see the second-round effects.

BP has shown us today the political pressure that companies are going to be under to sever ties with Russia, especially where there’s shared interest with the Kremlin. The level of horror at the events in Ukraine being experienced around the world, combined with that political pressure, will continue to see companies cut ties which will compound the impact of the sanctions.

Whether we continue to see more risk-aversion in the markets may well hang on the talks currently taking place between Russian and Ukrainian officials. It’s hard to imagine a ceasefire and Russian exit being agreed upon given the events of the last week but we live in hope.

An agreement would naturally lift sentiment and we could see stocks quickly reversing their losses. A failure could see things turn ugly again as Russia will not take these sanctions lying down. They will have massive implications for the Russian economy and retaliation is almost certain.

Oil eyeing $100 again as the US considers another SPR release and a nuclear deal

Oil prices are naturally rallying strongly at the start of the week. Brent and WTI are both closing in on $100 once again and only a significant de-escalation looks likely to derail that. If the talks end badly today, we could see oil continue its ascent as markets factor in prolonged fighting in Ukraine and the risk of supply disruptions.

Talks are continuing between the US and Iran towards a nuclear deal which could help ease some of the pressures in the oil market. But we may not see the full benefits of that unless we see an agreement between Russia and Ukraine, at which point we could see a significant pullback in the price.

The US and other consuming countries are also reportedly considering another release of reserves totalling 60-70 million barrels. This comes after a similar move in November that had only a limited impact on the markets. But combined with actions elsewhere, it could help ease the pressures we’re seeing.

Gold jumps as safe-havens in demand

Gold is back above $1,900 in risk-averse trade and up around 1.5% on the day. The events over the last few days have no doubt escalated tensions, although talks between Russia and Ukraine do offer some hope. The sanctions, in particular, add another layer of uncertainty to the situation which investors naturally don’t like.

We’re in a highly uncertain, inflationary environment and gold is the obvious hedge. The question is how much further it can go which obviously depends on how much more of an escalation we’ll see and what that does to commodity prices. But for now, it’s very well supported, despite easing slightly off its highs.

Bitcoin lower but resilient

Bitcoin is also lower on the day as traders abandon risk assets in favour of safe-havens. It’s continuing to show resilience though which will encourage the crypto crowd. As long as it continues to weather the storm and hold above $30,000, there will be a belief that it can thrive again once risk appetite improves. Unfortunately, there’s just no clear idea of when that will be.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading

Crude Oil

Global Oil Prices Surge as US Lawmakers Suspend Debt Ceiling

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years.




Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years. On the final vote, 149 Republicans and 165 Democrats backed the measure, while 71 Republicans and 46 Democrats opposed it.

Brent crude oil, against which Nigerian oil is priced, rose by 77 cents, or 1% to $75.05 a barrel by 9 am while U.S. West Texas Intermediate crude (WTI) was up 69 cents, or 1%, at $70.79.

Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government’s $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets.

Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the U.S. dollar , making oil cheaper for holders of other currencies.

Investor attention is now fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.

OPEC+ in April announced a surprise cut of 1.16 million barrels per day in April, but the gains from that move have since been retraced and prices are below pre-cut levels.

But signals on any fresh cut have been varied, with Reuters reporting and bank analysts indicating that further output cuts are unlikely.

On the demand side, the U.S. Institute for Supply Management (ISM) said its manufacturing PMI fell to 46.9 last month, the seventh-straight month that the PMI stayed below 50, indicating a contraction in activity.

Manufacturing data out of China painted a mixed picture. Thursday’s better-than-expected Caixin/S&P Global China manufacturing PMI contrasted with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.

Continue Reading

Crude Oil

Weak Chinese Data Weighs on Oil Prices Today

Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.



Crude Oil - Investors King

Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.75, or 2.37%, to $71.96 a barrel at 3:46 pm while U.S. West Texas Intermediate crude (WTI) shed $1.90, or 2.74%, to $67.56.

The decline in prices was caused by weak Chinese manufacturing activity. The data released by the Chinese government showed that activity in the sector contracted faster than expected in May with the official manufacturing purchasing managers’ index declining from 49.2 posted in April to 48.8 in May, below the 49.4 predicted by economists.

Also, the strong U.S. dollar is another factor impacting the purchase of crude oil as buyers holding foreign currencies found it too expensive.

The U.S. dollar index, which measures the greenback against six major peers, saw support from cooling European inflation and progress on the U.S. debt ceiling standoff, which will advance to the House of Representatives for debate on Wednesday.

Market players are preparing for the upcoming June 4 meeting of OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia.

Mixed signals by major OPEC+ producers on whether or not the group will decide to further cut oil production have sparked recent volatility in oil prices.

Despite the latest pullback in prices, HSBC and analysts do not expect OPEC+ to announce further cuts in the upcoming meeting.

HSBC said on Wednesday that stronger oil demand from China and the West from the summer onwards will bring about a supply deficit in the second half of the year.

Continue Reading

Crude Oil

NNPCL Confirms Pump Price Upward Review, See New Price List

The Nigerian National Petroleum Corporation Limited (NNPCL) on Wednesday confirmed it has indeed increased the price of petrol across the country.



Petrol - Investors King

The Nigerian National Petroleum Corporation Limited (NNPCL) on Wednesday confirmed it has indeed increased the price of petrol across the country.

This was made known in a statement signed by Garba Deen Muhammad, the Chief Corporate Communications Officer of NNPC Ltd, and made available to the public.

The statement reads “NNPC Limited wishes to inform our esteemed customers that we have adjusted our pump prices of PMS across our retail outlets, in line with current market realities.

“As we strive to provide you with the quality service for which we are known, it is pertinent to note that prices will continue to fluctuate to reflect market dynamics.

“We assure you that NNPC Limited is committed to ensuring a ceaseless supply of products.

“The company sincerely regrets any inconvenience this development may have caused. We greatly appreciate your continued patronage, support, and understanding during this time of change and growth.”

Price of petrol jumped up across the country immediately after President Bola Ahmed Tinubu declared that the fuel subsidy is gone on Monday during his inauguration.

Checks by Investors King show that in some parts of the country, prices rose as high as 500% before NNPCL reportedly released the widely circulated list below to curtail marketers’ excesses.

Price was cheapest in Lagos at N488 a litre because of its close proximity to the port while it was highest in the northern states with Maiduguri and Damaturu recording the highest at N557 a litre. See the list below

NNPCL outlets across the country have been directed to implement the new price, starting from May 31, 2023.

“DEAR ALL. Following Management approval of the Upward review of NNPC PMS pump price as in below table for Mega/Standard/Leased Stations, Please find below schedules for the RMSs and Wayne to handle. Please implement meter change as approved effective today 31st May 2023. Wayne is to attend to all locations as relates to their area of coverage in our network,” a statement read.

Continue Reading