Russia-Ukraine war: Global crude oil prices rebound after a drop

After soaring to multi-decade highs on Thursday, global crude oil prices rallied early on Friday after a tumultuous previous session.  

Global crude oil prices reversed early on Friday after dipping during the previous volatile session, after initially soaring to multi-decade highs on Thursday as the Russia-Ukraine war escalated, raising fears of runaway inflation.

Oil markets were volatile due to supply disruptions caused by the previous session's sanctions on Russia. Russian exports exceeded those of any other country except Saudi Arabia by 4 to 5 million barrels per day.

Brent crude futures rose to within 16 cents of $120 per barrel, the highest since 2012, before falling to around $110, on longings that the United States and Iran will soon reach an agreement on a nuclear deal that will add output to a severely undersupplied market.

However, Brent crude oil futures reversed over 1.5 per cent to $112 early on Thursday, as supply concerns remain and on expectations that Russia's war in Ukraine could hit the global economy by dampening spending and investment.

Analysts also stated that an agreement with Iran would not replace Russia's disruptions. Markets are volatile, leading investors to try to figure out a lot of moving parts "in one fell swoop," Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management, said to Reuters. 

Commodity prices have also risen in tandem with rising oil prices. From coal to natural gas and aluminium is rising as sanctions imposed on Russia following its invasion of Ukraine begin to distort supply.

Analysts at Motilal Oswal Institutional Equities stated that Russia was the world's second-largest crude producer in 2020. Also, the world's third-largest producer of aluminium. And the third-largest producer of nickel globally. 

They added that they believe the sanctions on Russia will impact the costs of aluminium, nickel, steel, thermal coal, and PCI coal. Also, it will lead to price escalations because of alternative sourcing, delays in establishing new sources, delays in payments and consequent deferrals in shipment releases, among others, they said. 

Asian stock markets suffered heavy losses, while gold prices rose as the Russia-Ukraine conflict worsened.

Indian shares dropped sharply on Friday, following a sell-off in global equity markets, as the escalating Ukraine crisis fueled inflation and growth concerns.