Oil prices soared past $100 for the first time in over seven years on Thursday after Russian President Vladimir Putin announced a”military operation” in Ukraine, apparently realising fears he would invade.
In response to the announcement, Brent reached $100.04 a barrel, as concerns grew over a full-scale conflict in eastern Europe, and WTI hit $95.54.
This came shortly after Putin made a surprise television announcement declaring his intentions.
“I have made the decision of a military operation,” Putin said shortly before 6:00 am (0300 GMT) in Moscow, vowing retaliation against anyone who interfered.
In addition, he urged the Ukrainian military to lay down its weapons.
Earlier, the Kremlin reported that rebel leaders in eastern Ukraine had asked Moscow for military assistance against Kyiv.
Following Russia’s recognition this week of two breakaway regions in Ukraine and its promise to provide “peacekeepers”, US officials warned of a potential Russian incursion.
After separatists called for help repelling Ukrainian forces, fears of a move grew.
The threat of a conflagration has stoked concerns regarding the supply of key commodities such as wheat and metals at a time when demand is rallying after the reopening of economies following pandemic lockdowns.
Crude oil prices have soared in recent weeks, and on Thursday, Brent crude oil finally crossed the $100 mark for the first time since September 2014.
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“Russia/Ukraine tensions bring both a possible demand shock (for Europe), and more importantly a much larger supply shock for the rest of the world given the importance of Russia and Ukraine to energy, hard commodities and soft commodities,” said National Australia Bank’s Tapas Strickland.
Governments are struggling to contain runaway inflation fuelled by demand, with many fearing the fragile global economic recovery will be hindered as life returns to normal after recent lockdowns.
(With inputs from agencies)