The price of oil jumped to its highest point since 2014 on Thursday following Russian President Vladimir Putin’s invasion of Ukraine, with international benchmark Brent crude surpassing $105 a barrel amid concerns about disruptions to the global energy supply.
U.S. West Texas Intermediate futures, meanwhile, jumped by more than 8% to trade at $99.46 — also the highest jump in eight years.
In the hours since the Kremlin began its invasion, the United States and other Western leaders vowed to follow through with a second, more punishing round of sanctions against Russia, the world’s second-largest producer of natural gas, which is expected to roil the global economy further.
President Joe Biden will meet Thursday morning with G-7 ministers, and they are expected to introduce a new round of sanctions this afternoon.
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Analysts, though, remain uncertain over what the sanctions could portend for oil markets.
“At this stage, it is anything but clear what could bring the Russian president to his senses, therefore the situation, the equity, and oil markets will remain volatile,” Tamas Varga, a senior analyst at PVM Oil Associates, told CNBC on Thursday.
“Even if prices drop back below $100/bbl due to abating tension in Eastern Europe, the retracement might prove short-lived and product tightness could keep oil prices at elevated levels in months to come,” he added.
In a statement Wednesday night, Biden sharply denounced the attacks on Ukraine as “unprovoked and unjustified” and vowed to join world leaders to hold Moscow responsible for its actions.
It is unclear to what extent oil and gas prices will be affected.
Biden acknowledged earlier this week that sanctions were likely to touch off higher gas prices in the U.S., though he vowed his administration would use “every tool” at its disposal to limit pain at the pump.
“As I said last week, defending freedom will have costs for us as well, and here at home,” Biden told reporters at the White House on Tuesday.
“We need to be honest about that. But as we do this, I’m going to take robust action to make sure the pain of our sanctions is targeted at Russia’s economy, not ours,” he said.
Biden added that the United States is “closely” monitoring energy supplies for any disruption. “This will blunt gas prices. I want to limit the pain the American people are feeling at the gas pump,” Biden said.
In addition, the State Department said the sanctions being weighed by the U.S. are not intended to hit global energy markets.
Speaking to reporters Tuesday afternoon, a senior department official said the penalties under consideration “are not targeting, and will not target, oil and gas flows.”
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“We would like the market to take note that there’s no need for increasing the price at the moment,” said the official, who spoke on the condition of anonymity.
