Oil prices hit seven-year high as Russia invades Ukraine threatening supplies

22 February 2022, 11:27 | Updated: 22 February 2022, 12:14

Oil prices have shot up in response to Russia's invasion into Ukraine.
Oil prices have shot up in response to Russia's invasion into Ukraine. Picture: Alamy

By Emma Soteriou

Global oil prices have hit a record high after Russia started its invasion of Ukraine on Tuesday morning in what has been labelled a "very dark day" for Europe.

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Brent crude - the basis for International pricing - rose to over $99 (£72) a barrel on Tuesday, peaking at its highest level since 2014.

US benchmark crude oil also advanced by almost $3 per barrel in electronic trading on the New York Mercantile Exchange.

It came as the FTSE 100 slumped by over one per cent on Tuesday morning, with analysts suggesting that oil could reach the $100 bench mark in coming days.

Meanwhile, in Asia, Tokyo's Nikkei 225 index dropped 1.7 per cent and the Hang Seng in Hong Kong fell 2.8 per cent.

Germany's Dax stood 0.7 per cent down and the Cac 40 in France was 0.5 per cent lower.

In Russia, the MOEX index dropped almost 11 per cent.

The hike in prices follows the decision from Russia to begin its invasion in Ukraine, after confirming that it would recognise two eastern rebel regions as independent states and sending troops - described as "peacekeepers" - to the areas.

As a major energy producer, Russia's latest move has also posed a threat to already unpredictable energy prices due to countries trying to recover from the pandemic.

Read more: Boris pledges 'barrage of sanctions' against Russia after Putin orders troops into Ukraine

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Russ Mould, investment director at AJ Bell, said the latest sell-off came as investors moved to dump shares in commodity producers, particularly those with exposure to Russia or Ukraine.

He said this would keep volatility high on stock markets across the globe.

Mr Mould said: "The threat of Russia invading Ukraine was clearly visible at the end of 2021, but most investors were more concerned about inflation and how fast interest rates might go up.

"Now the threat of war is very real, and investors will need to add it to their growing list of things to worry about. This could prompt another bout of panic and lead to heightened market volatility."

Amid the developments in Ukraine, Boris Johnson held a Cobra meeting at 6.30am on Tuesday, later announcing that the UK will impose a "barrage of sanctions" on Russia in what has been labelled a "very dark day" for Europe.

The sanctions will be aimed not just at entities at regions including Donetsk but also "in Russia itself, targeting Russian economic interests as hard as we can".

There are fears that Russia - the world's second largest oil producer - may look to retaliate in response to sanctions by the West, in particular with moves to hold back oil and gas supplies.

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