Oil, gas rocket to record levels on Ukraine conflict

By News Desk

London: Oil prices soared Wednesday above $113 per barrel and natural gas spiked to a record peak, as investors fretted over key producer Russia´s intensifying assault on Ukraine.

Brent crude futures rose by nearly $9, touching a peak of $113.94 a barrel, the highest since June 2014, before easing to $113.07, up by $8.10 or 7.7 percent.

U.S. West Texas Intermediate (WTI) crude futures jumped more than $9 to $112.51 a barrel, hitting the highest since August 2013 before losing some steam to trade up $7.74 or 7.5 percent to $111.15 a barrel.

"The war in Ukraine that Russia is waging with increasing severity is causing oil prices to skyrocket," said Commerzbank analyst Carsten Fritsch. Added to the picture, Europe´s reference Dutch TTF gas price rocketed by around 50 percent to forge an all-time record 194.715 euros per megawatt hour.

UK gas prices jumped to 463.84 pence per therm, close to the record 470.83 pence attained in December.

"Energy markets are seriously rattled, with gas prices also spiking," ThinkMarkets analyst Fawad Razaqzada told AFP.

"The big fear is the prospect of (a) Western import ban on Russian oil and gas -- or retaliation from Russia in cutting its energy exports to Europe."

Russia is one of the world´s biggest producers of natural gas and oil, and is a major exporter of other key commodities including aluminium.

The price of aluminium, used in a variety of items including drinks cans and aircraft components, hurtled to an all-time peak of $3,552 per tonne on Wednesday.

Ukraine and Russia are two of the world´s biggest producers of corn and wheat, which both soared to historic heights on Wednesday too.

Russian President Vladimir Putin´s invasion of its neighbour has sparked sharp swings across global markets over the past week, while Western sanctions prompted a dramatic collapse in the ruble. The crisis has seen numerous countries hammer Moscow with a series of wide-ranging sanctions that have isolated Russia and threaten to crash its economy.

But the main source of unease on trading floors is crude, which has rocketed since Russia began preparing to invade. The conflict in eastern Europe comes with oil prices already elevated owing to tight supplies and a strong recovery in global demand as economies reopen from pandemic-induced lockdowns, fuelling inflation around the world. "Investors, traders, and politicians alike are scrambling to address the worsening Russia-Ukraine standoff. The initial upward price reaction after the conflict in Ukraine started six days ago is only intensifying," said Rystad Energy analyst Louise Dickson.

"The current realistic scenario is that a large portion of Russian crude oil, as well as refined oil products, will no longer be palpable to the market and create a supply deficit for the duration of the armed conflict."

Trade in Russian oil was in disarray as producers postponed sales, importers rejected Russian ships and buyers worldwide searched elsewhere for crude as Western sanctions and pullouts by private companies squeezed Russia. Russian oil exports account for around 8 percent of global supply.

Meanwhile, Saudi Arabia, Russia and other top oil producers on Wednesday agreed to hold firm on only gradually opening the taps despite Russia´s assault on Ukraine sending prices spiralling.

OPEC+ -- at monthly back-to-back meetings that lasted less than an hour -- decided to stick to a decision from last year for an output target of 400,000 barrels per day for April as well, the group said in a statement.