Japan Earthquake Jolts Energy Markets
by Paul Springer
The human toll of Japan’s magnitude 8.9 earthquake remains unknown Friday morning, but the effect on energy markets was immediate and galvanic.
The Japanese government says it will do everything possible to maintain economic stability, according to a report from The New York Times.
Video footage from Russia Today of a tremendous tsunami surge and widespread destruction indicates a scope of damage that is difficult to comprehend.
Fire and smoke from damaged refineries soared hundreds of feet into the air, and The National Reporter says a fire broke out at a nuclear plant.
The U.S. has already delivered coolant to a damaged nuclear plant in Japan, according to Reuters.
“Japan’s earthquake forced port closings and shutdowns of oil refineries and metal plants in the world’s third-biggest economy on Friday, rattling commodity and energy markets as participants weighed up how quickly activity could return to normal,” The Globe and Mail says.
Japan is just one of many nations around the globe with economic troubles, and an economist roughed out the ramifications of the disaster for Bloomberg:
“The nagging question in the background here, given that public finances are in such a weak condition already, is this going to push Japan over the edge,” said Brendan Brown, chief economist at Mitsubishi UFJ Securities International in London. “If we’re talking about less than 5 percent of GDP, then it probably wouldn’t be the make or break factor. If we’re talking about much more than that, it could be a catalyst for wider concerns.”
IBT reports that the Nikkei dropped 3% before an early close, while there were sell offs in a variety of commodities.
The quake’s economic effects are likely to be felt outside of Japan, which is a huge consumer of petroleum products. And The Wall Street Journal reported that NYMEX futures for April delivery of light, sweet crude dipped below $100.
In the U.K., insurers were taking a beating in the market according to The Guardian:
Although it is too soon to assess the scale of the damage caused by the quake – which measured 8.9 on the richter scale – the likes of Swiss Re and Munich Re – reinsurers who take on secondary insurance – are down around 5%.
Meanwhile, President Obama offered his condolences and offered aid from the U.S.
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