Energy prices, notably natural gas and crude, climbed sharply on Tuesday, amid the threat of a full-scale invasion of Ukraine by Russia.
Against that backdrop, Brent oil
the international benchmark, rose 1.8%, or $1.71, to $97.10 a barrel on ICE Futures Europe after trading as high as $99.50. The front-month contract was headed for the highest finish since September 2014, FactSet data show.
West Texas Intermediate crude
for March delivery
was trading up $1.96, or 2.2%, at $93.03 a barrel, following a 0.8% slide on Friday, contributing to a 2.2% weekly loss ahead of its expiration at Tuesday’s settlement. Markets in the U.S. on Monday were closed in observance Presidents Day.
Russian President Vladimir Putin, in a speech on Monday, said that he recognized the independence of pro-Moscow separatist factions in Luhansk and Donetsk, Ukraine and was ordering troops into the breakaway regions as what he referred to as peacekeepers.
“Russia moved into separatists’ parts of the Ukraine, raising the odds of an all-out war,” said Phil Flynn, senior market analyst at The Price Futures Group, in a daily note. A war “could have a major impact on the delicate balance between supply and demand in a global oil market.”
Russia is the third-largest oil producer in the world and the second-largest producer of dry natural gas, according to 2020 data from the U.S. Energy Information Administration.
The animosities brewing over Ukraine drew a swift rebuke from the international community, with the White House issuing an executive order restricting investment and trade in those regions, while additional measures — likely sanctions — were expected to be announced Tuesday.
Meanwhile, officials from the European Union described Putin’s latest actions and statements as “a blatant violation of international law.”
Russia is a key supplier of natural gas to Western Europe and the intensification of conflict in Eastern Europe could influence prices. Energy analysts have said that dependence on Russian gas limit’s Europe’s ability to sanction Moscow if it invades Ukraine.
Some analysts have warned that crude oil could shoot above $100 a barrel if tensions in Ukraine erupt into full-blown war.