Oil prices jumped more than $7 in early trade on Monday after Russian President Vladimir Putin put the country’s nuclear deterrent on high alert in the face of Western nations and Japan stepping up sanctions against Russian banks.
The nuclear alert and bank payment constraints heightened fears that oil supplies from the world’s second-largest producer could be disrupted as Russia digs in following its invasion of neighbouring Ukraine.
U.S. West Texas Intermediate (WTI) crude futures were up $5.64, or 6.2%, at $97.23 a barrel, after hitting a high of $99.10 shortly after opening. WTI hit a high of $100.54 last week.
Brent crude futures were up $5.46 or 5.6%, at $103.39 at 2331 GMT, after hitting a high of $105.07 a barrel shortly after trade opened. Last week the benchmark contract hit a more than seven-year high of $105.79 after the invasion began.
Putin raised the stakes on Sunday, ordering Russia’s “deterrence forces” – which wield nuclear weapons – onto high alert, citing aggressive statements by NATO leadrs and the range of economic sanctions imposed on Russia by the West.
“President Putin’s decision to put Russian nuclear forces on high alert is a clear and worrying escalation that can only be supportive for oil prices. I reckon we could be in for some price fireworks in the morning,” Stephen Brennock of oil broker PVM told Reuters.
(Reporting by Sonali Paul in Melbourne and Alex Lawler in London; Editing by Stephen Coates)