The prospect of Fed interest rate hikes hit the market, and U.S. crude oil tumbled nearly 4% at one point

On Monday (January 24), Brent crude oil fell 1% to close at $87 / barrel
.
Tensions between Russia and the West over Ukraine and the possibility of a more hawkish stance by the Federal Reserve this week have sent shockwaves
in European and American stock markets.
The three major U.
S.
stock indexes opened all the way down, with the Nasdaq falling nearly 5% at one point, triggering market panic and dragging down other risk assets
such as crude oil.

The S&P 500 fell as much as 4% intraday, and the Cboe volatility index surged as much as 35%, its biggest
since October 2020.
Despite the decline in global risk assets and heightened geopolitical risks, interest rate markets remain firmly anticipating the Fed to raise interest rates
.

UBS commodity analyst Giovanni Staunovo said cyclical commodities such as crude oil and copper are suffering from risk aversion
.
The focus of commodity market participants has shifted from geopolitics to economic growth
.

Saudi Aramco said on Monday that consumption was close to pre-Covid levels
.
But geopolitical developments have diluted that in the favour, the UAE on Monday intercepted and destroyed two ballistic missiles
fired by the Houthis at targets in the country.
Russia increases its troops
near the Ukrainian border.
The head of the Japan Petroleum Association said oil prices already reflect the growing geopolitical risks between Russia, Ukraine and the West, but could jump further if there is any real conflict
.

Commerzbank analyst Carsten Fritsch said: "The further escalation of the situation in Ukraine and the Middle East justifies the risk premium in oil prices, as the relevant countries Russia and the United Arab Emirates are important members
of OPEC+.
" ”

JPMorgan economists Joseph Lupton and Bruce Kasman wrote in a research note that the latest geopolitical tensions between Russia and Ukraine have increased the risk of
a sharp spike in oil prices this quarter.
This is taking place at a time when inflation is already elevating, reaching its highest level in decades last quarter, and the global economy is hit by another wave of the pandemic, making an already fundamentally strong recovery more fragile
in the short term.

The bank believes that adverse geopolitical events between Russia and Ukraine will seriously disrupt oil supplies
.
Brent crude prices are expected to rise "rapidly" by 100% in one to two quarters, from an average of $75 to $150 a barrel
.

Both benchmarks rose for the fifth straight week last week, rising about 2 percent and hitting their highest since
October 2014.
Oil prices have risen more than 10 percent this year on concerns about tighter supplies and OPEC+, a group of OPEC and its allies, struggling to meet their monthly production increase target of 400,000 b/d
.