Oil prices surge, US equities tumble amid risk of Ukraine invasion

NEW YORK: Oil prices surged and US equities tumbled Friday afternoon as officials in Washington urged Americans to leave Ukraine immediately due to rising risks of a Russian invasion.

Markets lurched during a briefing by US National Security Advisor Jake Sullivan, who said a Russian invasion could “begin at any time,” including during the ongoing Beijing Winter Olympics. Near 1915 GMT, the broad-based S&P 500 was down 1.5 percent at 4,438.89. The benchmark West Texas Intermediate oil future was up about four percent to $93.48 per-barrel. Shares of weapons makers also moved higher, including Lockheed Martin, which gained 2.8 percent and Northrop Grumman, which rose 4.1 percent.

Investors had become less worried about an imminent invasion of Ukraine in recent days following Western diplomacy with Russian President Vladimir Putin, said Art Hogan, chief strategist at National Securities.But the shift in tone Friday from the Biden administration prompted a sell-off ahead of the weekend market closure.

“If the market hasn´t fully priced in the risk of a Russian incursion into Ukraine, it may start to do that,” said Hogan, adding that markets were in a “risk-off” mode.Earlier the western leaders vowed to take “swift and deep sanctions” against Moscow should Russia march on Ukraine, Berlin said after talks, as Washington warned that a Russian invasion could be just

days away.

US President Joe Biden joined six leaders, the heads of NATO and the European Union in crucial talks in a bid to defuse the worst crisis between the West and Russia since the end of the Cold War. “All diplomatic efforts are aimed at persuading Moscow to de-escalate. The aim is to prevent a war in Europe,” German Chancellor Olaf Scholz´s spokesman tweeted following the phone call.

But if Moscow failed to pull back, Berlin said “the allies are determined to jointly take swift and deep sanctions against Russia, should there be further violations of Ukraine’s territorial integrity and sovereignty”. These sanctions would target the financial and energy sectors, EU chief Ursula von der Leyen said. At the talks, “she reaffirmed the fact that all options were on the table and that sanctions would concern the financial and energy sectors, as well as exports of high-tech products,” the European Commission said in a statement, quoting von der Leyen. Several rounds of diplomacy have failed to ease tensions on Europe’s doorstep.

NATO Secretary General Jens Stoltenberg on Friday warned anew of the “real risk for a new armed conflict in Europe”, while US Secretary of State Antony Blinken said a Russian invasion could come “any time”. Russia is operationally ready to conduct a wide range of military operations in Ukraine and the Kremlin just needs to make the call, the head of Norway´s military intelligence service said. Putting it bluntly in the call with Western leaders, British Prime Minister Boris Johnson told them “he feared for the security of Europe”, his Downing Street office said. Britain and Norway on Friday joined the United States in asking their nationals to leave Ukraine.

Fuelling concerns, Russia is holding large-scale military drills with ally Belarus, which borders Ukraine and the European Union.Moscow and Minsk have not disclosed how many troops are participating, but the United States has said around 30,000 soldiers were being dispatched to Belarus from locations including Russia’s Far East.

In addition, Russia´s defence ministry said Friday it will also hold fresh military exercises near Ukraine´s border and in the Black Sea.

Meanwhile, the United States believes there is a “very distinct possibility” Russia will invade Ukraine but does not know if Vladimir Putin has made a “final decision,” National Security Adviser Jake Sullivan. “The way that he has built up his forces and put them in place... makes it clear to us that there’s a very distinct possibility that Russia will choose to act militarily,” Sullivan told reporters at the White House. “Our view is that we do not believe he has made any kind of final decision, or we don´t know that he has made any final decision,” he said. The White House said a potentially imminent Russian attack on Ukraine could begin with aerial bombing, urging Americans to leave the country within 48 hours. “Any American in Ukraine should leave as soon as possible, and in any event in the next 24 to 48 hours,” said Sullivan.”If a Russian attack on Ukraine proceeds, it is likely to begin with aerial bombing and missile attacks that could obviously kill civilians,” he added.