KUALA LUMPUR (March 7): The FBM KLCI slumped more than 20 points on Monday (March 7) morning after global crude oil prices surged over 10% to above US$130 (about RM543.14) a barrel as the Russia-Ukraine war, which shows no sign of cooling, flags the risk of a stagflationary shock for world markets.

In economic theory, stagflation refers to the situation where stagnant demand and high unemployment are compounded by persistently high inflation.

At 11.26am, the KLCI had fallen 23.14 points or 1.44% to 1,580.80. The key index was traded at between 1,580.27 and 1,606.56 so far in the day.

It was reported on Monday that crude oil prices soared more than 10% in hectic trading as the risk of a US and European ban on Russian products and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets.

It was reported that the euro extended its slide, hitting parity against the safe haven Swiss franc, and commodities of all stripes were on the rise as the Russian-Ukraine conflict showed no sign of cooling.

"Russia calls the campaign it launched on Feb 24 a 'special military operation', saying it has no plans to occupy Ukraine.

"Brent was quoted US$12.73 higher at US$130.84, while US crude rose U$9.92 to US$125.60," Reuters reported.

Bank of America (BofA) chief economist Ethan Harris was quoted as saying: "If the West cuts off most of Russia's energy exports, it would be a major shock to global markets."