BP slides over Russia exit as London markets fall again

BP shares dropped sharply as the markets opened lower again in London while oil prices surged.

The oil giant dropped by as much as 7% at the start of trading on Monday following its decision to sell its near 20% stake in Russian oil business Rosneft.

BP will sell its 14 billion dollar (£10.4 billion) stake in the oil producer it co-owns with the Kremlin after facing pressure from the Government, the company confirmed on Sunday afternoon.

The oil firm’s chief executive Bernard Looney is also resigning from the Rosneft board with “immediate effect”.

BP shares recovered slightly but remained 6.3% lower at 8.30am.

The move happened after Russian President Vladimir Putin attacked Ukraine last week in what BP’s chairman called an “act of aggression” with “tragic consequences”.

BP said plans to potentially find a buyer for its Rosneft stake will not harm its ability to increase payouts for shareholders.

Nevertheless, investors were shaken by the news on Monday morning.

Meanwhile, the FTSE 100 moved 1.2%, or 89.34 points, lower to 7,400.22 points shortly after the markets opened.

The FTSE 250 dropped by 0.68%, while the other major European markets showed larger falls.

The German Dax slid by 1.9% and the French Cac 40 tumbled 2.04% at the start of trading as the situation in Ukraine continued to intensify.

Oil prices swung higher once again, with the price of a barrel of Brent crude oil lifting 3.42% to 101.28 dollars.

In Russia, the country’s central bank raised its key rate in a desperate attempt to shore up the plummeting rouble and prevent the run of banks amid crippling Western sanctions over the Russian war in Ukraine.

The bank hiked the benchmark rate to 20% from 9.5%.

It followed a Western decision on Sunday to freeze Russia’s hard currency reserves, an unprecedented move that could have devastating consequences for the country’s financial stability.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Calamitous times have led to desperate measures by Russia’s central bank as it tries to stop a domestic run on the banking system and the international flight from the rouble.

“It’s clear the sanctions hitting Russia are landing serious bruises with the rouble plunging around 30% as investors assess the repercussions of Moscow’s aggression.

“Russia has become isolated from Western financial markets and step by step is being left out in the cold, outside the reach of crucial transactional networks.”