Brent crude reached highs of $102.48 on Thursday morning, rising by more than 5 per cent as reports of explosions in Kiev and other major cities in the country filtered across the globe.
Russia is the world’s second-largest oil producer and conflict and is a major supplier to Europe. It is also the largest supplier of natural gas to the continent.
Western nations have already announced a raft of sanctions following Moscow’s military incursion into Ukraine.
Russia’s energy sector has not yet been targeted. However, with the US, EU and UK all set to discuss tougher measures on Thursday, there are concerns oil supply could be hit.
“It’s not just geopolitical risk that is the problem but the further straining of supply,” OCBC Bank economist Howie Lee told Reuters.
“Russian oil supply will disappear overnight if faced with sanctions ... and OPEC can’t produce fast enough to cover this gaping hole.”
Meanwhile, Asian stock markets plunged on opening on Thursday, with market benchmarks in Tokyo and Seoul falling 2 per cent. Hong Kong and Sydney lost more than 3 per cent.
Some members of the Organisation of the Petroleum Exporting Countries (OPEC) said there is no need for the group and its allies to increase output further due to a potential deal between Iran and world powers whice would increase supplies.
However, a number of OPEC members are already struggling to meet current targets.
Japan and Australia meanwhile announced on Thursday that they were prepared to tap their oil reserves should global oil supplies be affected by hostilities in Ukraine.
Analysts are also warning that increased oil prices could put inflationary pressure on the global economy, particularly for Asia, which imports most of its energy needs.
“Soaring oil prices come at an especially difficult time,” HSBC economist Frederic Neumann said.
“Asia’s Achilles heel remains its vast import needs for energy, with surging oil prices bound to take a hefty bite out of income and growth over the coming year.”
Indirect nuclear talks between the US and Iran in Vienna have also been taking place in which a deal might lead to the removal of sanctions on Iranian oil sales and increase supply on a global scale.
The news comes just hours after Russia launched widely condemned major military assault on Ukraine, with Mr Putin warning that the response from Moscow will be “instant,” should anyone try to take on Russia.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies