New York: Global oil prices pushed higher on Thursday after a Malaysian jetliner crashed in rebel-held eastern Ukraine, sparking concerns of an escalation in the crisis in the former Soviet state. The US benchmark futures contract, West Texas Intermediate for August delivery, shot up $1.99 to close at $103.19 a barrel on the New York Mercantile Exchange.
Brent North Sea for delivery in September, in the contract's first day of trade, settled with a gain of 72 cents at $107.89 a barrel in London. Markets were unnerved by news that Malaysia Airlines Flight 17, carrying 295 people from Amsterdam to Kuala Lumpur, crashed near the rebel-held town of Shaktarsk in the Donetsk region.
Ukraine's government and pro-Russia insurgents traded blame for the disaster, with Kiev saying the plane was shot down in a ‘terrorist’ attack. Comments attributed to a rebel commander suggested his men may have downed the passenger jet by mistake, believing it was a Ukrainian army transport plane. The news sent European and US stock markets tumbling and investors fleeing for the traditional safe haven of bonds.
The Malaysia plane crash came a day after the US and the European Union strengthened sanctions against Moscow, with US President Barack Obama criticizing Russia for its "continued provocations in Ukraine."
The Russians responded angrily to the sanctions, calling the latest punishments "blackmail" and threatening retaliation. The plane crash is "really bad news, much more serious than the sanctions announced yesterday by Washington," said Gregori Volokhine, president of Meeschaert Capital Markets.
"This calls into question the security of air routes in this part of the world and other sensitive regions" like the Middle East, Volokhine said. "Air travel is very important for the economy," he added. "This is very destabilizing for travelers and investors."
