Oil prices pull back from $100 on hopes of talks between Russia and Ukraine
Oil prices pulled back from session highs after Russian president Vladimir Putin said the Kremlin is ready to hold negotiations with Ukraine, easing market concerns over supplies.
Prices in the commodity hit a seven-year high on Thursday night as traders scrambled to cope with concerns over possible disruption in Russian supplies after the invasion of Ukraine.
Brent crude (BZ=F) fell back below the $100 (£74.66) a barrel threshold on Friday, dipping 1.6% to $97.53. The oil benchmark topped $100 a barrel in intraday trading in the previous session, breaching that level for the first time since 2014.
US West Texas crude (CL=F) also lost some steam declining to $92.14 a barrel, down 0.7%.
Russian forces have been invading deeper into Ukraine, with multiple reports of explosions heard in the capital Kyiv on Friday as the attacks continue into a second day.
As a result, Britain and the US unveiled tougher sanctions against Russia, but oil was spared, helping to ease some of the initial jitters.
Meanwhile, the EU warned Moscow that it could impose more sanctions on Russia over the invasion, a day after leaders agreed on a robust package of measures.
"When it comes to the sequencing of packages we have always said we have a massive package prepared and we will be applying this package in a progressive way, responding to concrete actions by Russia, and we are not at the end," an EU official said on Friday.
Read more: How Russia's war on Ukraine is impacting stock prices
The US announced its toughest sanctions yet on Russia as Russian troops moved in closer on Kyiv. US president Joe Biden made the move following the “premeditated” attack on Ukraine.
America is sanctioning Sberbank (SBRCY), Russia's largest lender, as well as four other financial institutions, and a broad swathe of Russian elites and their family members.
Biden also said that the US and EU had opted not to cut Russia off from the Swift payment system but said they could revisit that issue. Johnson has been pushing for Russia to be removed from Swift.
Ukrainian president Volodymyr Zelenskyy said on Friday that he held talks with UK prime minister Boris Johnson to discuss tougher sanctions on the Kremlin and military support.
Shares in oil giants BP (BP.L) and Shell (SHEL.L) rose on Friday after oil prices climbed back below $100pb.
Shell edged up 2.5%, while rival BP shares were up 3.2% to 374.5p. The latter has been under pressure to sever its links to Russia and sell its 20% share in Russia's state oil company Rosneft (ROSN.ME) after Johnson said the UK must reduce its reliance on Russian hydrocarbons.
Other commodity prices were mixed as some remained elevated and others retreated. Gold (GC=F) declined 1.9% to $1,890 per ounce after gaining more than 3% on Thursday to $1,969 an ounce — its highest levels in a year.
Meanwhile, three-month aluminium prices (ALI=F) on the London Metal Exchange fell 2.5% to $3,348 a tonne after rising to a record high of $3,443 on Thursday amid investor concerns over supplies from Russia, and an impact on production from higher energy prices.
Wheat prices soared 2.8% to $9,605 a bushel, its highest level since 2008, while soybean and corn also rose, raising concerns that the Russia-Ukraine situation will drive food prices higher.
Russia and Ukraine supply a quarter of the world’s wheat, and half of its sunflower products, such as seeds and oil, while higher gas prices have a knock-on effect on food through fertiliser and transport costs.
Read more: What Ukraine's invasion means for consumer prices in the UK
Russia is the world’s largest natural gas exporter, while Ukraine is a key supplier of gas, crops and steel to Europe.
Large amounts of gas are piped from Russia through Ukraine to the European Union, meaning that disruptions pose risks of shortages and will add to inflationary pressures.
Russia is also major metals producer, and produces 6% of the world’s aluminium and 7% of its mined nickel.
Natural gas (NG=F) was 3.7% lower on Friday. Earlier this week Germany pulled the plug on a major gas project, the $11bn Nord Stream 2 pipeline owned by the Russian state-owned gas giant Gazprom.
Fuel prices in the UK are poised to keep soaring after petrol and diesel prices hit a fresh record.
Road fuel costs rose to a new record for the fourth time in a week, according to RAC, with petrol costing an average 149.67p per litre, and diesel hitting an all-time high of 153.05p.
Read more: What is the Swift payment system the UK wants Russia thrown out from?
"The average price of both petrol and diesel rose to new record heights for the fourth time this week," said Simon Williams from the RAC. "Unleaded moved ever closer to the grim milestone of £1.50 a litre at 149.67p yesterday while diesel has now topped £1.53 (153.05p) for the first time ever."
Williams said this was the "worst possible combination for drivers" as it will drive already rising prices higher and worsen the cost of living crisis. "Drivers need to brace themselves for what’s to come, with many on lower incomes having to make difficult choices as a result of needing to put fuel in their cars.”