US Considers 'Energy Isolation' of Russia Following SWIFT Expulsion... Global Economy in Turmoil

Ukrainians residing in the U.S. urging sanctions against Russia in front of the White House [Image source=Yonhap News]

[Asia Economy New York = Special Correspondent Joselgina, Reporters Moon Jewon, Kwon Jaehee] Following the United States' expulsion of Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment network, it is now considering the 'energy sanctions' card. This is a measure to further pressure Russia, which is engaging in negotiations while not hesitating to threaten nuclear action. As uncertainties surrounding Ukraine escalate daily, the global economy has entered a state of chaos.

According to the White House on the 27th (local time), the Biden administration is intensifying phased sanctions after excluding Russia from the SWIFT payment network used by more than 11,000 major banks and financial institutions worldwide. White House Press Secretary Jen Psaki appeared on ABC News that day and hinted at the possibility of future energy sanctions, saying, "Everything is on the table."

This is closely related to President Vladimir Putin's nuclear threat card in response to the West's massive sanctions on the same day. Russia, facing stronger-than-expected resistance in Ukraine, decided to engage in 'unconditional' negotiations with Ukraine in Belarus on the 28th, but such nuclear threat remarks have rather heightened tensions.

The global financial market is shaking. As geopolitical risks increase, international oil prices have surged immediately. As of 9:30 a.m. KST on the 28th, Brent crude futures prices rose sharply by 5.0% in after-hours trading to $102.81. West Texas Intermediate (WTI) crude futures also surged 6.2%, trading at $97.27 per barrel.

The impact of SWIFT sanctions and others is expected to disrupt Russia's major raw material exports, further increasing upward pressure on oil prices. Amrita Sen of Energy Aspects predicted, "Being excluded from SWIFT alone can cause serious short-term disruptions in energy trading."

The price of gold futures, a representative safe-haven asset, rose 1.6% to $1,917.6 per ounce. Meanwhile, risk assets such as stocks slid. At the same time, Dow Jones futures, S&P 500 futures, and Nasdaq futures all showed declines in the 2% range. Seosang Young, an analyst at Mirae Asset Securities, analyzed, "The high-intensity sanctions such as the U.S. and Europe blocking Russia from SWIFT are acting as a significant burden on the financial markets."

With the continued strength of the U.S. dollar, the won-dollar exchange rate opened at 1,204.0 won, up 2.4 won from the previous trading day in the Seoul foreign exchange market. As financial sanctions against Russia intensify, safe-haven asset preference is expected to increase, continuing the dollar's strength, which will likely lead to greater intraday exchange rate volatility.

The global supply chain, which was once shocked by COVID-19, is expected to experience delayed recovery due to the Ukraine crisis. The European Union (EU) announced a ban on Russian airlines' operations in its airspace. Major U.S. logistics companies UPS and FedEx announced the temporary suspension of transportation services to Russia and Ukraine.

This content was produced with the assistance of AI translation services.