World stocks fall and oil prices rise 1:12
New York/London (CNN Business) --
Oil prices surged above $100 a barrel after Russia launched an invasion of Ukraine, mounting pressure on a global economy already reeling from runaway inflation.
Brent crude, the global benchmark, added 8.5% to trade at $105.40 a barrel at 5:30 am ET on Thursday.
Brent last traded above $100 a barrel in 2014. US oil prices rose 8% to over $100 a barrel.
How much oil does the United States import from Russia?
A wide-ranging offensive by Russian forces targeted military infrastructure in Ukraine as well as several airports early Thursday.
The assault began hours before dawn and quickly spread across central and eastern Ukraine as Russian forces attacked from three sides.
The Nord Stream 2 and the energy crisis in Europe 2:25
Russia is the world's second largest oil producer and one of the main exporters of natural gas.
Supply disruptions could push up retail prices, making it more expensive for people around the world to fuel their cars and for Europeans to heat their homes.
Gasoline prices are already at record levels in parts of Europe.
World oil supplies were already very tight.
Crude oil for short-term delivery commands a record premium over longer-dated contracts, according to analysts at UBS, as investors react to declining inventories and rising demand.
Some refiners are avoiding buying Russian oil for fear of sanctions, they added.
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Russia invades Ukraine: breaking news, news and live reactions
Prices have risen steadily for almost a year, fueled by a resurgence in demand following the easing of pandemic lockdown measures.
The Organization of the Petroleum Exporting Countries (OPEC) and 10 other major crude oil producers, including Russia, have gradually increased production but have struggled to meet their own production targets despite enormous pressure from major nations. consuming energy to pump more.
The Ukraine crisis adds another dimension to the tense politics of the OPEC+ coalition.
The Russian economy relies heavily on oil and gas revenues, and Moscow wants prices to stay high.
Saudi Arabia, a major US ally, will now come under intense pressure from developed economies to increase production.
A tight market and armed conflict in Europe is a powerful combination.
Oil prices could hit $140 a barrel in a worst-case scenario where energy flows are disrupted, according to analysts at Capital Economics.
The International Energy Agency warned earlier this week that military action could put at risk 250,000 barrels a day of Russian oil exports transiting through Ukraine via pipelines to supply Hungary, Slovakia and the Czech Republic.
However, those countries have large emergency reserves.
There are limited sources of additional supply.
Rising prices will encourage US shale producers to increase production.
A nuclear deal between Iran and the West that eases sanctions on the OPEC member could also bring more barrels to market.
"An Iranian nuclear deal that lifts sanctions and increases production remains a wild card, but the market will increasingly need additional oil," analysts at S&P Global Platts Analytics said.
Conflict Russia - Ukraine
