On Saturday the European Union nations that control SWIFT, the dominant global network connecting banks, announced that they would expel some specific Russian banks from the network. The U.S., Canada, and the United Kingdom agreed with the move. The U.S. and its European allies left open the question of sanctions directly on Russia’s central bank.
The move to deny access to SWIFT means that the named Russian banks, and I’m not naming them because I haven’t been able to find a list, won’t be able to pay other banks or receive funds from other banks. They will not be able to transact business with international banks over the SWIFT network for their client businesses. I’d expect that out of an abundance of understandable caution, many Western banks will refuse to do business with Russian banks at all.
International benchmark Brent crude jumped as much as 4.7% to $95 a barrel for the first time since 2014. Brent was up 23.68% and trading at $94.77 at 3 p.m. New York time Friday. U.S. benchmark West Texas Intermediate, which normally trades below Brent in price, was up 4% to $93.50 a barrel at 3 p.m. in New York.
U.S. crude benchmark West Texas Intermediate rose above $90 a barrel–it closed at $90.87, up 0.60% for the day, for the first time since 2014. International benchmark Brent crude gained 0.42% to close at $91.53 a barrel. Of course, it took a wild confluence of events to push prices above $90.
OPEC+ meets tomorrow and the oil cartel and friends like Russia is expected to approve an increase in production that will reduce last year’s cuts in production. But the odds are that the decision won’t matter.
On Saturday, January 15, in my “Saturday Night Quarterback” post wrote that conflict (a more comprehensive term than “war) between Russia and Ukraine remained a low probability event–but that the probability wasn’t zero and the the odds of conflict had increased in the past month. What’s happened since then? The odds of conflict have climbed