By Julie Zhu

(Reuters) – Oil prices jumped and Asian shares dropped Tuesday, as the talks with Ukraine failed to progress. Investor fears about inflation and slowing growth were triggered by Russia’s ban on imports of oil from Ukraine.

According to Reuters, President Joe Biden is open to a U.S. ban of Russian oil imports, even if European allies don’t, citing two sources familiar with the matter.

Already, oil prices are at their highest level in 14 years. Russia has warned of a spike to $300 per barrel. It also threatened to close its main gas line to Germany should the West stop imports due to the invasion by Ukraine.

MSCI’s Asia-Pacific share index outside Japan fell 0.4% in the early trading session, following a stormy Wall Street session. The Australian share index fell 0.3%, while the US shares dropped 0.24% in the midst of a flood of red on Asian markets.

Blue chips in China fell by 0.15%, while Hong Kong’s rose by 0.39%.

The international oil benchmark, which briefly topped $139 per barrel during the previous session, surged in morning trading and rose 0.8% to $124.20.

Prices of other commodities rose, such as nickel, as traders and industrial buyers struggled to keep up with the Russian-Ukraine conflict.

“Global risk mood started the week very negative. But, after European leaders said they wouldn’t support sanctions on Russian exports of energy, and preferring instead a determined plan to decrease dependence on Russian imports,” ANZ analysts wrote in a note.

Markets can be volatile and are sensitive to changes in tone. As commodity prices are still firmly anchored, the progressive increase in breakeven inflation rates shows that inflation worries have grown.

Russia describes its actions against Ukraine as “special operations.” However, this move has led to severe sanctions from the United States (and Europe) that seek to isolate Russia in a way never seen before by any large economic country.

Wall Street’s principal indexes dropped sharply overnight with the confirm that they were in a bearish market. They fell by 2.37% and 2.95 respectively, while the Nasdaq Composite lost 3.62%.

On Monday, shares in U.S. payments companies plunged American Express Co (NYSE 🙂 shutting down 8.0%. It announced on Sunday that it had suspended all operations in Russia, Belarus and the European Union. Visa Inc (NYSE:), fell 4.8%, and Mastercard Inc. (NYSE:), fell 5.4% following similar announcements on the previous day.

On Monday, the benchmark yield rose to 1.768%, compared to its U.S. closing of 1.749%. With traders expecting higher Fed Fund rates, the two-year yield rose to 1.5563% from 1.548% on Monday.

Global inflation will continue to rise with the rally in oil prices and other commodities. Data this week is expected to reveal that the U.S. Consumer Price Index increased by 7.9% year-on-year in February from 7.5% in January.

Following a week of losses, and a 3% drop last week to its lowest level since mid 2020, European growth prospects are dimming. The single currency rose 0.1% to $1.086.

The was at 99.215.

The price of gold was slightly higher. The gold was bought at $1.989.3546/ounce. [GOL/]