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Oil price surges over $100 as Russia-Ukraine crisis escalates 

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VIENNA: Brent oil surged to $100 a barrel for the first time since 2014 as Russia’s dramatic escalation of the Ukraine crisis sparked fears of a disruption to the region’s critical energy exports.

Russia is the world’s second-largest oil producer, which mainly sells crude to European refineries, and is the largest supplier of natural gas to Europe, providing about 35% of its supply.

Russian President Vladimir Putin announced a “military operation” in Ukraine and called on soldiers there to lay down their arms, defying Western outrage and global appeals not to launch a war. Putin made a surprise statement on television to declare his intention.

“Sanctions forcing Russia to supply less crude or natural gas would have substantial implications on oil prices and the global economy. Russia accounts for one in every 10 barrels of oil consumed globally, so it is a major player when it comes to the price of oil and it’s going to hurt consumers at the petrol pumps,” said Navneet Damani, Sr. Vice President – Commodity & Currency Research, Motilal Oswal Financial Services.

Despite a surge in international prices, Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp – which together control more than 90% of the domestic market – have frozen petrol and diesel rates for over three months. Analysts expect petrol and diesel prices to go up sharply in India after state elections end next month, adding pressure on the government and the central bank to take steps to contain inflation.

Analysts said one factor that could act as a temporary brake on prices is the Iran nuclear deal with rumors swirling around that a new agreement could be announced soon. The U.S. and Iran have been engaged in indirect nuclear talks in Vienna, in which a deal could lead to the removal of sanctions on Iranian oil sales and increase global supply. 

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