Listen to This Article Enhance your reading experience by listening to this article.

Top oil producer Saudi Arabia warned that Yemeni rebel attacks on the kingdom’s oil facilities pose a “direct threat” to global supplies, while Baltic states indicated they would favour an embargo of Russian crude in retaliation for its invasion of Ukraine.

The comments propelled crude prices higher, with both Brent and West Texas Intermediate gaining more than seven per cent to climb above $110 a barrel.

“We saw what happened when the US first floated the idea of the EU banning (crude) imports… and if this becomes a realistic prospect, we could see oil prices rising much further,” OANDA analyst Craig Erlam said.

Wall Street dipped after Federal Reserve Chair Jerome Powell said the US central bank is prepared to raise interest rates by bigger steps than the quarter-point hike announced last week if that is what is needed to contain “much too high” inflation.

Harsh reality

“The harsh reality of faster rate rises is setting in for some traders and that could eventually lead to a taper tantrum which might happen alongside stagflation,” Edward Moya of OANDA said. 

“Monetary policy is still accommodative for now, but that could quickly change if the Fed delivers a couple of supersized rate hikes by the summer.” The Dow and Nasdaq both closed about half a percentage point lower, while the S&P 500 ended flat.

European equities finished slightly in the red — though London had added half a per cent at the close — after Ukraine rejected a Russian ultimatum to surrender its besieged southern city of Mariupol.

At a meeting Monday, EU nations remained split over banning Russian energy imports, with Germany, reluctant given its huge reliance on Russian gas. But a top official from the bloc decried “a massive war crime” being carried out by Moscow in Mariupol.