Oil prices jumped by more than a dollar per barrel Monday as Russia’s military advance into Ukraine raised fears of economic sanctions against one of the world’s major energy producers. Natural gas prices also surged at the prospect of a decrease in global supplies.
Benchmark U.S. crude for April delivery was up $1.20 to $103.79 per barrel at 0520 GMT in electronic trading on the New York Mercantile Exchange. The contract added 19 cents on Friday to close at $102.59. Brent crude, which is used to set prices for international varieties of crude, gained $1.62 to $110.69 on the ICE exchange in London.
Markets were responding as thousands of Russian troops solidified control over Crimea in the Ukraine. The U.S. warned Sunday that Moscow could face economic penalties unless it retreats.
The military advance into Crimea, a predominantly Russian speaking region that is friendly to Moscow, came after protesters ousted Ukraine’s pro-Russian president, Viktor Yanukovych, over his decision to turn the country toward Russia instead of the European Union. Yanukovych fled to Russia after more than 80 people were killed in the protests in the capital Kiev, but insists he’s still president.
Russia was the world’s second-largest producer of oil in 2012, accounting for 12.6 percent of global supplies, according to the International Energy Agency. It was also the world’s top exporter of natural gas in that year, the IEA said, so any economic sanctions taken against Moscow would limit world supply and push up prices.
“Ultimately the market wants to know to what extent the West will impose economic sanctions on Russia if there is bloodshed and further deterioration,” IG market strategist Chris Weston said in a report.
Natural gas was up by 10.3 cents to $4.712 per 1,000 cubic feet.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 3.7 cents to $3.014 per gallon.
— Heating oil added 4 cents to $3.056 per gallon.