Oil prices soared on Thursday, with the Russian military’s air and ground attack on Ukraine briefly pushing US WTI above $100 a barrel and Brent above $105 a barrel for the first time since 2014.
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Around 12:45 GMT, the price of a barrel of Brent from the North Sea, the benchmark for black gold in Europe, soared 7.84% to 104.43 dollars, and a barrel of West Texas Intermediate climbed 7 .31% to $98.81.
The two crude benchmarks had not experienced such peaks since 2014.
Moscow launched an invasion of Ukraine at dawn on Thursday, with airstrikes across the country, particularly on the capital Kiev, and the entry of ground forces from the north, east and south of the country.
“The market expects a massive tightening of the supply” of black gold, said Carsten Fritsch, analyst at Commerzbank.
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Russia is one of the world’s leading producers of gas and oil, panicking investors about possible disruptions in the supply of hydrocarbons.
“In the event of a partial interruption of Russian oil deliveries, the other major producing countries could only compensate to a limited extent,” warns the analyst.
Two days after recognizing the independence of Ukrainian separatist territories in Donbass, Russian President Vladimir Putin gave the signal for hostilities. “I have made the decision for a special military operation,” he announced in a surprise statement on television before 6:00 a.m. (03:00 GMT).
“The seething tension surrounding Russia’s recognition of breakaway territories in eastern Ukraine escalated overnight,” said Tamas Varga of PVM Energy.
“At this stage, we don’t know at all what could bring the Russian president to his senses,” he says. “As a result, stock and oil markets will remain volatile.”
At least 40 soldiers and a dozen civilians were killed Thursday in the early hours of the Russian invasion of Ukraine, according to Kiev.
The offensive sparked an international outcry, with emergency meetings scheduled in several Western countries including NATO and the European Union.
Russian gas dependency
“The spike in the price of oil is terrible news for businesses and consumers, and fundamentally it clarifies one of the main impacts of the war between Russia and Ukraine” on the global economy: “it will serve to fuel more inflation,” said Russ Mould, an analyst at AJ Bell.
“Energy bills will continue to rise,” he continues.
Russia is also the world’s largest exporter of natural gas. The Old Continent imports about 40% of its needs from Russia.
There is no immediate solution to replace imports from Russia on the European gas market, if these were to cease, warned the French energy giant TotalEnergies on Thursday.
“If the Russian gas does not come to Europe, we have a real subject of gas prices in Europe”, declared the president of the group Patrick Pouyanné, emphasizing the European dependence on Russian gas.
French Secretary of State for European Affairs Clément Beaune assured him on Wednesday that Europe had “enough stocks to get through the winter”.
Following the recognition of pro-Russian Ukrainian provinces, Germany had finally resolved on Tuesday to suspend the certification of the Nord Stream 2 gas pipeline, a flagship project for Berlin as for Vladimir Putin carried out for a long time despite criticism.
A senior American official saw in the Berlin announcement a “major turning point” which will “liberate Europe from the Russian geostrategic vice” linked to the supply of natural gas.
The reference market in Europe, the Dutch TTF (Title Transfer Facility) rose again, to 129.00 euros per megawatt hour (MWh).
The price of natural gas has thus soared by 40%, the largest single-day increase since 2019.