Oil prices have reached the $100 milestone for the first time since 2014, after Russia initiated a wide-scale attack on Ukraine today.
Brent Crude has soared 5.30 per cent to $101.97, peaking earlier in the session at $102.35, while WTI Crude has boomed 5.07 per cent to $96.77.
This follows prices seesawing between dips and spikes over the course of yesterday with markets plagued by uncertainty, which has now been replaced with a grim sense of clarity.
Ukraine’s president Volodymyr Zelensky has confirmed that Russia has initiated missile strikes on Kyiv and Kharkiv.
He is now calling on his national security and defence council to declare martial law.
There have also been reports of Russian troop movements in Odessa, while the Ukrainian armed forces posted a statement revealing that Russian military began “intensive shelling” of its units in the east of the country.
Multiple reports are now also quoting Ukrainian officials saying troops in Belarus are joining the Russian attack, meaning the offensive is now also coming from Ukraine’s north.
Prime Minister Boris Johnson revealed he had spoken with Zelensky, and was “appalled” by the last developments.
He said the UK will respond “decisively” with its partners.
This was echoed by US President Joe Biden who also held talks with Ukraine’s president, condemning Russia’s initiation of conflict as “unprovoked and unjustified.”
He has further revealed he will be meeting with G7 leaders on Thursday, and that the US and its allies “will be imposing severe sanctions on Russia”.
He said: “We will continue to provide support and assistance to Ukraine and the Ukrainian people.”
Ukraine’s Minister of Foreign Affairs Dmytro Kuleba has called for immediate sanctions warning that the “world is at stake.”
The rapid escalation of conflict in region has driven prices above the $100 threshold, but the market’s rally has ben underpinned by powerful fundamentals.
Underinvestment in the oil sector, combined with OPEC+ consistently missing raised output targets, has pushed Brent Crude to nine successive weeks of market rallies.
Nevertheless, conflict has raised concerns of shortening supplies in an already tight market.
The West is likely to impose more sanctions on Russia following the emergence of conflict in Ukraine – while the Kremlin has sent mixed signals about its likely response to such measures over the past week.
If Russia cuts off oil supplies, as a key OPEC+ producer, this could further drive up prices.
Earlier this week, Bank of America warned that prices could reach $120 per barrel, depending on the severity of the conflict.