Oil prices jumped on Thursday, topping $100 a barrel for the first time since 2014 as Russia plans to attack Ukraine, proliferating fears that a war in Europe could disrupt global energy supplies.
After Russian President Vladimir Putin authorized a military operation, Ukrainian Foreign Minister Dmytro Kuleba, said in a tweet that Russia had launched a full-scale invasion of Ukraine and was targeting cities with weapons strikes.
Amid fears that the situation could go further, Brent crude hit a high of $102.48 a barrel, the highest since September 2014, and was at $102.06 a barrel at 5:47 a.m., up $5.22, or 5.4%. U.S. West Texas Intermediate crude futures jumped $4.85, or 5.3%, to $96.95 a barrel, after hitting $97.40, the highest since August 2014.
Oil prices have jumped more than $20 a barrel since the start of 2022 on fears that the U.S. and Europe will impose sanctions on Russia’s energy sector, disrupting supply. Indeed, Russia is the world’s second-largest oil producer, primarily selling its crude to European refineries, and Europe’s largest supplier of natural gas, providing about 35 percent of Europe’s supply.
“Russia’s announcement of a special military operation in Ukraine has pushed Brent to the $100 a barrel mark. This growing uncertainty at a time when the oil market is already tight makes it vulnerable, so prices are likely to remain volatile and high,” said Warren Patterson, head of commodities research at ING.
Also, Western nations and Japan punished Russia on Tuesday with new sanctions for sending troops into separatist regions of eastern Ukraine, and threatened to go further if Moscow launched an all-out invasion of its neighbor. “It’s not just the geopolitical risk that’s the problem, but the added pressure on supply,” said OCBC economist Howie Lee.
Japan and Australia have said they are ready to tap their oil reserves, along with other International Energy Agency member countries, if global supplies are affected by hostilities in Ukraine. It remains to be seen how the situation develops in the coming hours.
Featured photo : © Getty Images