The daily business briefing: February 28, 2022
BP divests from Russian oil giant Rosneft over Ukraine invasion, Russian central bank raises interest rate to boost ruble, and more
BP dumps its 20 percent stake in Russian oil giant Rosneft
Energy giant BP is dumping its 20 percent stake in Russian oil company Rosneft in response to Russia's invasion of Ukraine. BP called the invasion "an act of aggression which is having tragic consequences across the region." Rosneft accounts for half of BP's oil and gas reserves, and about a third of its production. BP said divesting will result in charges of $25 billion, with profits in 2025 alone expected to drop by $2 billion. The exit marks a drastic turnaround for BP, Russia's biggest foreign investor. "Russia's unprovoked invasion of Ukraine must be a wake-up call for British businesses with commercial interests in Putin's Russia," U.K. business and energy secretary Kwasi Kwarteng tweeted.
Russian central bank hikes interest rate to support crashing ruble
Russia's central bank on Monday hiked a key interest rate from 9.5 percent to 20 percent to fight inflation and depreciation of the ruble, after the Russian currency fell by 30 percent to a record low against the dollar as Europe and the U.S. imposed harsh sanctions over Russia's invasion of Ukraine. The move came after the United States, European Union, Canada, and the United Kingdom over the weekend announced plans to cut off some Russian banks from the SWIFT financial support network, a global payment system connecting international banks. The allies also said they would take steps to thwart the Russian central bank's attempt to boost Russia's economy with its more than $600 billion in reserves, part of an escalating push by the West for Moscow to negotiate peace.
FedEx, UPS halt deliveries to Russia
FedEx and UPS on Sunday notified customers through their websites that they were halting shipments to Russia in the wake of its invasion of Ukraine. The two companies, which are among the world's largest package delivery services, also said they were suspending deliveries to Ukraine as the fighting continues there. They said they would continue closely monitoring the situation. "Our focus is on the safety of our people," UPS said in a statement. German logistics company Deutsche Post DHL also suspended shipments to and from Ukraine and diverted planes around Ukrainian airspace. DHL did not immediately say whether it was changing operations in Russia.
Several states suspend sales of Russian vodka
Several states over the weekend suspended purchases and sales of Russian vodka in a show of solidarity with Ukraine as it fights a Russian invasion. Ohio Gov. Mike DeWine (R) told his state's department of commerce to halt the purchase and sale of vodka made by Russian Standard, the only Russian-owned distillery with vodka sold in the state. Utah, Texas, and Virginia also ordered the removal of Russian-made vodka and other products from store shelves. Virginia's Alcoholic Beverage Control Authority noted that Russian-themed brands like Stolichnaya and Smirnoff, which aren't produced in Russia, would remain available. New Hampshire Gov. Chris Sununu (R) ordered the removal of Russian spirits, saying the state "stands with the people of Ukraine in their fight for freedom."
U.S. stock futures fall as Ukraine fallout continues
U.S. stock futures dropped sharply early Monday due to concerns about economic fallout from Russia's invasion of Ukraine. Futures tied to the Dow Jones Industrial Average were down by 1.3 percent at 6:30 a.m. ET. Futures for the S&P 500 and the Nasdaq were down by 1.4 percent and 1.7 percent, respectively. U.S. and global markets have experienced volatile trading since Russia's military attacked Ukraine last week, facing unexpectedly strong resistance from Ukrainian forces. Russian troops entered Ukraine's second-largest city, Kharkiv, over the weekend, and Russian President Vladimir Putin put his country's nuclear deterrence forces on high alert Sunday as nations around the world supported Ukraine with weapons and sanctions against Russia.