- The UK government has announced the first tranche of sanctions against Russia.
- The Bank of England policymakers have warned that the Russia-Ukraine crisis could affect the commodity supply chain, further adding to already rising inflation in UK.
- According to the RAC, Average petrol and diesel prices have hit new highs of 149.30p per litre and 152.68p respectively in the UK on Wednesday, as the geopolitical tension between Russia-Ukraine continues to affect oil prices.
The UK government has announced the first tranche of sanctions against Russia, targeting five banks, IS Bank, Rossiya, Promsvyazbank, General Bank and the Black Sea Bank. The measures are part of a coordinated Western response to the crisis. The UK government also said that in the coming weeks businesses would be prevented from doing business in the regions of Donetsk and Luhansk, similar to Crimea, a region Russia illegally invaded in 2014.
The ministers have criticised Prime Minister Boris Johnson for failing to take tougher actions like the US and EU, who are further planning to impose tougher sanctions against Russia.
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Effects of Russia-Ukraine crisis
The Bank of England policymakers have warned that the geopolitical tension between Russia and Ukraine could affect the commodity supply chain, further adding to already rising inflation in the UK on the back of rising energy prices.
The UK inflation is currently more than double the Central Bank’s 2% target, adding to the current cost of living squeeze. The UK inflation rate rose to 5.5% in January from 5.4% in December 2021.
It has warned that inflation could hit 7.25% by April, when energy regulator Ofgem will again hike the energy bills and tax payment will also increase as recommended by the Chancellor. The rising inflation is putting pressure on the central bank to further increase the interest rate in March.
Bank of England governor Andrew Bailey has asked businesses to show restraint when raising their prices to help people manage inflation and soaring bills.
Impact on Commodity prices
According to the RAC, average petrol and diesel prices have hit new highs of 149.30p per litre and 152.68p, respectively, in UK on Wednesday, as the geopolitical tension between Russia-Ukraine continues to affect the oil prices. The wholesale gas prices further continue to rise putting pressure on the squeezing budget of households. The RAC has warned that petrol prices could go higher than £1.50 per liter in coming days due to the prevailing crisis.
Saudi Arabia is the world’s largest oil exporter, followed by Russia, which is the largest producer of natural gas globally. Currently, UK imports 5% of its gas and 6% of its crude oil from Russia, but further sanctions could affect the supply chain and drive-up global prices.
© 2022 Kalkine Media®
The prices of Brent crude oil rose to over US$99 (£73), its seven-year high on Tuesday before falling back to US$96 on Wednesday. However, on Thursday, Brent oil prices hit over US$100 a barrel after Russian President Vladimir Putin announced a military operation in Ukraine.
Gazprom Energy, a subsidiary of Russia’s state-owned gas and oil giant is one of the largest suppliers of gas in UK, accounting for around 20.8% of the UK market. If the UK government imposes more tough sanctions on the Russia-owned supplier, it may result in higher energy prices for UK businesses and households.
Here are the three Russian companies that may get affected by the UK sanctions.
- Rosneft Oil company (LON: ROSN)
Rosneft Oil Company is a leading Russia-based oil refiner and crude exporter. The company’s shares were trading at US$5.50, at 8:23 AM (BST) on 24 February 2022, with the market cap of £42,989.88 million.
- PJSC Gazprom (LON: OGZD)
PJSC Gazprom is Russia’s state-owned global energy business. The company’s shares were trading at US$4.68, down by 30.14% at 8:28 AM (BST) on 24 February 2022, with the market cap of £58,489.76 million.
- Sberbank of Russia (LON: SBER)
Sberbank of Russia is a state-owned Russian banking and financial services company. Its shares were trading at US$8.97, at 8:28 AM (BST) on 24 February 2022, with the market cap of £35,694.33 million.