Oil hits 10-year high and closes in on $120 a barrel
Brent crude oil (BZ=F), the international benchmark, climbed to over $119 (£89) a barrel to a 10-year high on Thursday as the war in Ukraine continued to stoke supply concerns.
It briefly touched $119.30, its highest level since March 2012, before later retreating slightly meaning Brent has gained $20 in just a week since Russian troops pushed into Ukraine.
West Texas Intermediate (CL=F) was also trading above $115 on the day, its highest since 2008.
It comes as the US has targeted Russia’s oil refining sector with sanctions, with the possibility that its oil and gas exports will be next on the list.
Earlier this week, the US, along with Japan and other major consumer nations, agreed to release 60 million barrels from their stockpiles in an attempt to stabilise global energy markets.
However, Russia’s key role as an exporter of oil and gas is driving more chaos in energy markets, while the region's importance for other key commodities means panic is spreading through markets.
After the US and Saudi Arabia, Russia is the third largest oil producer globally, and is also the world's largest natural gas exporter.
“With OPEC+ refusing to respond to the sharp spike in oil prices by sticking to its 400,000 barrels per day increase in output in March and with the market unfazed by the IEA’s global crude reserve release, the geopolitical tensions look set to push oil prices higher with Brent crude on track to breach $120 or even $125 as the next major resistance hurdles,” Victoria Scholar, head of investment at Interactive Investor, said.
Russian deputy prime minister Alexander Novak, who attended the OPEC+ talks on Wednesday, said he hoped oil market volatility would ease and that Russian output was expected to reach pre-pandemic levels in May.
Read more: What Ukraine invasion means for consumer prices in the UK
Meanwhile, benchmark European natural gas prices jumped as much as 20% to €198 per megawatt-hour on Thursday.
The Dutch April gas futures contract has gained more than 12% to €186 per megawatt hour, setting a new record, while the UK equivalent is also approaching the record high hit at the end of last year.
It is currently 8.3% higher at 426.9p per therm, not far from the all-time high of around 450p in December.
UK drivers are now facing record petrol and diesel prices amid soaring oil prices. February marked the fourth month of rising fuel prices with petrol and diesel both shooting up by £4.5p a litre to new record highs, according to RAC.
Read more: Petrol and diesel prices: How cost of fuelling up car at the pump is rising
Energy analysts warn prices could even reach £1.60 a litre causing yet more pain for motorists with no end in sight.
"February was undoubtedly a shocking month for drivers. A rise of 4.5p in any month is bad enough but when it takes pump prices to record levels, it’s bound to hurt households across the UK," said RAC fuel spokesman Simon Williams.
"Motorists are having to endure successive months of rising prices and, sadly, it doesn’t look as though February will be the last."