ADDIS ABABA – Oil prices broke above $100 a barrel for the first time since 2014 afterRussian President Vladmir Putin launched a “special military operation” against Ukraine on Thursday.
Energy prices had already been soaring in recent months for various factors, including the pandemic, limited supply and growing tensions between Russia and Ukraine.
After the attack was announced on Thursday Morning, Brent Oil prices rose $8.24 to 105.8 a barrel, the highest level since July 2014.
Natural gas prices popped 4.1%. Spot gold, traditionally seen as a safe haven asset, climbed 3%, last trading at $1,966.01, according to various reports.
‘Putin Unleashes Russian Forces’
Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two, after months of military buildup along the border they both share.
In a pre-dawn TV statement, Putin said Russia did not plan to occupy Ukraine and demanded that its military lay down their arms.
Moments later, attacks were reported on Ukrainian military infrastructure and border guard units, media reports say.
The attack came days after the Kremlin leader formally recognized the independence of two pro-Moscow separatist regions in eastern Ukraine.
Ukrainian Foreign Minister Dmytro Kuleba said via Twitter on Thursday that Putin had “launched a full-scale invasion,” of the country, which he described as “a war of aggression.” Kuleba called on world leaders to stop the Russian president.
“The time to act is now,” he said.
The United States, Canada, Britain, the European Union, Australia and Japan were among the countries to announce the first wave of sanctions against Russia earlier this week, targeting banks and wealthy individuals.
A second barrage of measures is widely expected shortly.
Sanctions Impact on Energy
Matthew Smith, lead oil analyst, said there may not be an immediate disruption to supply despite Russia’s invasion.
Nearly 40% of the European Union’s natural gas and 26% of its crude oil comes from Russia.
Europe and Russia are very interconnected when it comes to energy, and each side is reliant on the other, the analyst told CNBC, a US-based business and financial news network, on Thursday.
The U.S. and the West will probably not impose sanctions specifically on energy flows, he added.
“We’re not likely to see the supply side of things interrupted, even though everything else is escalating,” he said.
However, Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, said he expected prices to spike further once the market digested the full implications of the invasion.
“A move above $100 appears inevitable, and I believe a move by Brent to $120.00 is not out of the question, as per my previous comments ad nauseum,” Halley said in a note on Thursday.
Even sanctions not specifically aimed at the energy market could indirectly crimp exports of oil and natural gas or prompt Moscow to retaliate by limiting supply, say some reports.
In January, a group of economists at JPMorgan Chase & Co. predicted that a surge to $150 a barrel would reduce global economic growth by more than three quarters, to less than 1 percent in the first half of the year, according to a report by Al Jazeera.
– News Agencies
[FEATURED IMAGE David Zalubowski/AP Photo]