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On Monday Russia launched “a massive strike (the words of Russian President Vladimir Putin) on civilian infrastructure, including crowded train stations, in Ukraine in retaliation for the explosions Saturday that destroyed a crucial ridge linking Russian-occupied Crimea to Russia. Russia has blamed Ukraine for the destruction of the bridge. The Ukrainian government has, so far, not claimed responsibility for the action, but U.S. sources are telling the Washington Post and the New York Times that the destruction was the work of Ukrainian special forces.

The Russian attacks were horrifically indiscriminate. According to the Washington Post, the attack caused electricity outages and disrupted water supplies in cities across Ukraine. For a third night in the past week, a residential apartment building in the southeastern city of Zaporizhzhia was hit. In Kyiv, the missiles caused heavy explosions around 8:15 a.m., leaving vehicles in flames near Taras Shevchenko Park — on a road often jammed with rush-hour traffic.

Besides a general increase in fear and uncertainty–the VIX “fear index claimed 5.99% to 33.24 as of noon New York on Monday, October 10–in the financial markets, I think investors should focus on the implications for the oil market and oil prices.

The European Union has been debating whether to modify another round of sanctions on Russian oil exports that are set to go into effect in December. In June, the European Union agreed to a full ban on insurance and financial services for seaborne oil. Those sanctions, which would take a big bite out of Russian oil exports (shipping companies are reluctant, for some reason, to risk their ships when they can’t get insurance), are set to kick in on December 5. In recent weeks the United States and some European countries have been looking to modify the ban on fear that it would hit Europe’s energy supply too hard. I think you can say that effort to weaken the ban is dead after Russia’s attacks.

In addition, a new seat of sanctions, due to come into force this week, would prohibit maritime transport of Russian oil to third countries unless that oil were priced below a European Union price cap. President Putin has said that Russia will not sell oil to countries that apply a price cap.

I think it’s fair to say that in the aftermath of the Russian attacks, the United States and the European Union will be looking for new stricter sanctions rather than looking to tweak these.

For its part, Russia seems committed to upping the pace of hostilities in Ukraine. On Saturday Putin announced that he had named General Sergei Surovikin as the overall commander of the war in Ukraine. Surovikin is a veteran officer who is a favorite of Russia’s hardest pro-war right wing, and who led the Russian military expedition in Syria in 2017, which was characterized by the bombing of civilian areas. You don’t appoint a Surovikin if you’re thinking about turning down the military effort.

As of noon Monday, oil prices haven’t moved significantly higher–partly because the markets are already digesting the effects of a cut in oil production by OPEC and Russia last week that has sent oil prices back over $90 a barrel.

As of noon on Monday U.S. benchmark West Texas Intermediate was off 0.22% to $92.44 a barrel. International benchmark Brent crude was off 0.60% to $897.33.

I don’t this calm will last, however, and I expect oil prices to move higher in the coming weeks even in the face of continued fears of a slowdown in China and in the global economy in general.

As of Monday, October 10, I’m adding shares of the U.S. Oil Fund ETF (USO) to my Volatility and Jubak’s Picks portfolios. I’m setting a target price of $85 a share for the U.S. Oil Fund in my Jubak Picks Portfolio. The stock was trading at $$74.73 at noon on October 10