UK’s FTSE avoids loss as Truss to become prime minster; crude oil off highs (NYSEARCA:VGK)

Germany’s DAX (DAX) closed -2.2% Monday as investors were spooked by the economic risks of Russia’s cutoff of natural gas supplies, while U.K.’s FTSE (NYSEARCA:VGK) (NYSEARCA:EWU) finished +0.1% as Liz Truss will become Prime Minister after winning the Conservative Party leadership vote.

Sterling (FXB) was fractionally lower vs. the dollar on Monday, trading just below $1.15, but Deutsche Bank strategist Shreyas Gopal warned the risks of a “sterling crisis” should not be underestimated.

Crude oil futures are trading higher but below earlier levels above 3%, with November Brent crude (CO1:COM) +2.5% to $95.36/bbl and October WTI crude (CL1:COM) +2.5% to $89.03/bbl, after the OPEC+ Joint Ministerial Monitoring Committee recommended a 100K bbl/day production cut.

The supply cut is mild but shows OPEC+ is serious about managing global crude markets and willing to take preemptive action, Saudi Energy Minister Prince Abdulaziz bin Salman said Monday.

“The simple tweak shows that we will be attentive, preemptive and pro-active in terms of supporting the stability and the efficient functioning of the market,” bin Salman said.

J.P. Morgan’s shock forecast earlier this summer said crude oil prices could surge to as high as $380/bbl if the G-7 placed a price cap on Russian oil and Vladimir Putin retaliated with production cuts.