Crude prices jumped on Monday as the European Union weighs an embargo on Russian oil imports in line with its western allies, sending prices near to $115 (£87.11) a barrel.
EU nations had previously backed away from imposing a ban but Baltic countries including Lithuania are still pushing for it, according to Reuters.
Pressure for more sanctions, in addition to financial embargoes already in place, is building amid Russia's bombardment of Mariupol port, which EU foreign policy chief Josep Borrell declared "a massive war crime".
It comes after Houthi rebels targeted various Saudi Aramco (2222.SR) oil and gas sites across the kingdom over the weekend, causing a temporary drop in output, adding more pressure on a jittery market.
Oil prices climbed for a third consecutive session ahead of a EU meeting with US president Joe Biden on Thursday. Brent crude (BZ=F) rose 6.3% to $112.75 a barrel. US light crude (CL=F) was 6% higher to $110.98 in electronic trading on the New York Mercantile Exchange at the time of writing.
Last week, the International Energy Agency (IEA) warned that global markets could be denied 2.5 million barrels a day of Russian oil from April as sanctions take hold and buyers shun Russian supplies.
The Paris-based agency also cut its demand forecast for the second to fourth quarters of this year by 1.3 million barrels per day (bpd).
IEA said a move by its members to release 60 million barrels from emergency supplies would initially provide a buffer for energy markets but these could not address long-term supply issues.
Earlier in March, the OPEC+ said it was sticking to a 2021 agreement to continue gradual restoration of output that was halted during the pandemic. The cartel will add 400,000 bpd to the market from April.
Only two cartel members, Saudi Arabia and the United Arab Emirates, have the spare capacity to offset the potential market shortfall. The UAE previously encouraged its OPEC+ members to pump more oil to calm high prices and relieve fuel costs.
Britain is also preparing to issue the first new North Sea drilling licences since 2020 as ministers scramble to firm up energy supplies that have been disrupted by the Ukraine conflict, according to the FT.
It comes as, Aramco, Saudi Arabia’s majority-state owned company and the world’s largest crude producer, vowed to raise investments by around 50% this year as it posted a $110bn annual profit. It plans to boost capital spending from $31.9bn to $40-50bn in 2022.
The oil giant said it plans to raise its crude oil "maximum sustainable capacity" to 13 million barrels a day by 2027, and wants to increase gas production by more than 50% by 2030.
Aramco produced about 12.3 million barrels of oil per day last year.
Chief executive Amin Nasser said: "We recognise energy security is paramount for billions of people around the world, which is why we continue to make progress on increasing our crude oil production capacity, executing our gas expansion programme and increasing our liquids to chemicals capacity".