The price of oil jumped Thursday to its highest level since 2014 after Russia launched a full-scale invasion of neighboring Ukraine, with the international benchmark Brent crude surpassing $100 a barrel ahead of expected disruptions in the global energy supply.
Crude oil reached a high of $105.79 per barrel Thursday morning, rising more than 8% since the hostilities began. U.S. West Texas Intermediate futures increased more than 8% to trade at $99.46 — also the highest level in eight years.
Russian President Vladimir Putin launched an attack on Ukraine by land, sea, and air early Thursday after building up more than 150,000 troops along the country's borders. The invasion began days after Putin illegally recognized two rebel regions in eastern Ukraine as independent states, claiming Ukraine's government was committing "genocide" against ethnic Russians there as a pretext to send Russian soldiers to war.
Ukraine is now embroiled in war, and Western governments are preparing to impose severe economic sanctions on Russia to punish Putin.
President Joe Biden met with G-7 ministers Thursday morning and will deliver remarks sometime Thursday afternoon to announce the new actions the United States will take against Russia.
Russia is the world's second-largest producer of natural gas and one of the largest exporters of oil. The impact of war, and of punitive sanctions against Russia, is expected to continue to drive energy prices up as the situation in Eastern Europe remains uncertain.
“At this stage it is anything but clear what could bring the Russian president to his senses, therefore the situation, the equity and oil markets will remain volatile,” PVM Oil Associates senior analyst Tamas Varga said Thursday, CNBC reported.
“Even if prices drop back below $100/bbl due to abating tension in Eastern Europe, the retracement might prove short-lived and product tightness could keep oil prices at elevated levels in months to come,” he added.
Increasing prices for crude oil will mean Americans are going to pay more for gas. Already the average U.S. price for a gallon of gasoline reached $3.53 this week, the highest average since 2014, according to data from the Energy Information Administration.
Biden warned in a speech Tuesday that energy prices will continue to rise as the U.S. levies additional sanctions on Russia.
“As I said last week, defending freedom will have costs, for us as well and here at home,” Biden said. “We need to be honest about that. But as we do this, I'm going to take robust action to make sure the pain of our sanctions is targeted at the Russian economy, not ours.”