Oil on Tuesday rose to its highest since 2014 after Russia ordered troops into two breakaway regions in eastern Ukraine, adding to supply fears that are pushing prices towards $100 a barrel.
Germany decided to freeze the certification of the Nord Stream 2 gas pipeline from Russia while the United States and European Union discussed potential sanctions as Ukraine reported continued shelling in the eastern region.
“The potential for a rally over $100 a barrel has received an enormous boost,” Tamas Varga of oil broker PVM told Reuters.
“Those who have bet on such a move anticipated the escalation of the conflict.”
Brent crude, the global benchmark, rose by $1.93, or 2 percent, at $97.32 by 14:48 GMT, having earlier hit its highest since September 2014 at $99.50.
U.S. West Texas Intermediate (WTI) crude soared by $2.96, or 3.3 percent, from Friday to $94.03, with the market having been closed on Monday for a public holiday. WTI also touched a seven-year high on Tuesday as it hit peak at $96.
“We see the oil market in a period of frothiness and nervousness, spiced up by geopolitical fears and emotions,” Julius Baer, analyst at Norbert Rucker, told Reuters.
“Given the prevailing mood, oil prices may very likely climb into the triple digits in the near term.” Baer added.
The Ukraine crisis has added further support to an oil market that has mounted on tight supplies as demand recovers from the COVID-19 pandemic.