Shares in BP PLC (LSE:BP.) slumped as investors feared the oil major will fall victim to international sanctions after Russia launched a"full-scale invasion" of Ukraine overnight.
BP owns nearly 20% of Rosneft (AIM:ROSN), Russia's third-largest oil company. Rosneft, which has a secondary listing in London, may be targeted depending on what Western governments do next.
Rosneft shares tumbled 31% in London.
Earlier this week, the UK announced a series of sanctions against Russia after it ordered troops into two rebel-held regions of eastern Ukraine, the BBC reported.
Five banks have had their assets frozen, along with three Russian billionaires - who will also be hit with UK travel bans.
British Prime Minister, Boris Johnson, said at the time Russia's actions amounted to a "renewed invasion" and the sanctions were a "first barrage".
A raft of new sanctions is expected in the coming days after reports surfaced overnight of Russian tanks and troops rolling across the border into Ukraine and cruise missile strikes on major cities including the capital Kyiv.
In the fourth quarter of 2021, Rosneft (AIM:ROSN) contributed some US$555mln to BP’s US$4.32bn profit (RC) and US$2.42bn of the full year US$14.42bn group profit.
BP was paid US$464mln of dividends from Rosneft (AIM:ROSN) during the fourth quarter, as the Russian firm paid shareholders some 18.03 roubles per share equating to 50% of its first half net profit.
“BP is the largest private shareholder of Rosneft (AIM:ROSN) with a share of 19.75%, as well as the leading British investor in the Russian economy with a total investment of US$18bn,” Rosneft (AIM:ROSN) highlighted in a statement two months ago.
A barrel of brent crude rose 6.6% to US$103 as Russia piled troops into Ukraine.
Russia supplies 35% of Europe’s oil, with analysts expecting increased hostilities to weigh on costs for Russia’s antagonists.
“This growing uncertainty during a time when the oil market is already tight does leave it vulnerable, and so prices are likely to remain volatile and elevated,” Warren Patterson, head of ING’s commodity research, told Reuters.
BP fell 4.5% at 365.50p in morning deals.