Oil prices were close to $100 a barrel on Tuesday, the highest in more than seven years, while European gas futures briefly jumped 13 percent after Russia ordered troops into the two breakaway territories in Ukraine late Monday evening,
In Asian markets, the international benchmark, Brent Crude, jumped 2.9 percent to $97.87 per barrel, while U.S. West Texas Intermediate (WTI) surged 3.61 percent to $94.36 per barrel, according to CNBC News.
“The potential for a rally over $100 a barrel has received an enormous boost,” said Tamas Varga of oil broker PVM. “Those who have bet on such a move anticipated the escalation of the conflict.”
The massing of Russian troops at the Ukraine border – along with the ups and downs of trying to find diplomatic solutions in what has become a caustic geopolitical crisis – has kept the oil market volatile.
Reuters is now reporting that Germany has put the certification of the Nord Stream 2 gas pipeline from Russia on ice while the United States and European Union are discussing potential sanctions, even as Ukraine reports continued shelling in east Ukraine.
Additionally, the Organization of Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, have resisted calls to boost supply more rapidly.
An invasion of Ukraine could disrupt Russian natural gas and oil shipments to parts of Europe and then be followed by a decline in purchases of Russian energy by the West. But even worse, this would lead to fears in Europe of being cut off from winter heating fuels.
The big question stems around just how far the West is willing to go with sanctions against Russia? The New York Times notes that analysts say that Western nations may try to avoid hitting oil and gas exports because of the potential impact on world energy markets, especially in Europe.
In a very sobering comment, a senior British minister on Tuesday said that Russia’s move into Ukraine has created a situation as grave as the 1962 Cuban missile crisis when a confrontation between the United States and the Soviet Union brought the world to the brink of nuclear war.
