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Energy prices surge and shares fall as US discusses Russia oil banCrude hits highest level since 20

The prospect of expanded sanctions aimed at Russian oil has raised the threat of higher inflation © Reuters

Oil prices soared on Monday to more than $139 a barrel after the US said it was in “active discussions” to ban Russian crude imports, while the threat of an economic shock in Europe dragged down stocks and the euro.

The jump in the international crude oil benchmark Brent marked an almost 20 per cent rise from its settlement price on Friday, taking it to its highest level since the 2008 financial crisis.

European wholesale natural gas prices also shot higher, with futures jumping to a new record of €345 a megawatt hour from about €193 on Friday — a rise of almost four-fifths. A year ago, the price stood at about €16. Both rallies later moderated, but investors say the rapid ascent of oil and gas prices poses particularly severe risks to the neighbouring European economy.

“Russian exports are too big to be substituted. Moreover, the US shale miracle has ground to a halt after years of under-investment,” said Louis Gave of research house Gavekal. “In short, without Russian oil and gas in the world markets, prices will keep shooting up.”

The shifts came after Antony Blinken, US secretary of state, said Washington was in “very active discussions” with European allies over an oil ban in the wake of Russia’s full-scale invasion of Ukraine.

Europe’s Stoxx 600 share index, which last week dropped 7 per cent in its worst performance since March 2020, had lost a further 1.1 per cent by midday on Monday.

“Basically, the further away a company is geographically from Ukraine, the better,” said Marcus Poppe, co-fund manager of DWS Top Dividende.