LONDON: Oil prices surged close to $100 per barrel on Tuesday as major crude producer Russia sent troops into two breakaway regions of Ukraine.

But after heavy falls at the open, European stocks bounded into positive territory as the Kremlin said it remained open to all diplomatic contact over Ukraine and Western nations held off on imposing draconian sanctions.

Brent North Sea crude oil reached $99.50 per barrel, the highest level in seven years. At around 1630 GMT, it pulled back to under $97, still a gain of around 1.5 per cent compared with late Monday.

“The intensifying crisis between Russia and Ukraine has raised concerns about the supply disruptions that would ensue as sanctions look set to cripple Russia, the world’s second-largest oil exporter and the world’s top natural gas producer,” noted Victoria Scholar, head of investment at Interactive Investor.

“Whatever happens next, one thing is clear: energy prices are unlikely to come back down in a hurry,” said ThinkMarkets analyst Fawad Razaqzada.

“Consumers’ disposable incomes have already been stretched by surging inflation, and if oil and other energy prices continue to rise, this could hurt the economic recovery, and raise concerns about a possible recession,” he added.

The jump in oil prices is compounding worries about inflation around the world, with the US Federal Reserve coming under intense pressure to tighten monetary policy to prevent prices running out of control.

Haven investment gold climbed past $1,900 an ounce.

Published in Dawn, February 23rd, 2022