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The price of oil continued to rise on Tuesday as Russia's military intensified its assault on the capital city of Ukraine.
Some analysts think oil prices could go as high as $150 per barrel.
West Texas Intermediate crude jumped 10.6% to around $106 per barrel on Tuesday, its highest level since July 2014, while international benchmark Brent crude gained 9.5% to trade at more than $107 per barrel.
The International Energy Agency held a meeting with energy officials from around the globe on Tuesday to discuss how they can play a role in stabilizing energy markets.
While the United States and Western allies have imposed severe economic sanctions against Russia for its military aggression, most countries have not yet targeted the country with tough energy sanctions.
Russia is the world's second-largest oil producer and analysts fear that if Russia's energy exports are disrupted, global energy markets could face a supply shock.
Canada became the first country to target Russia's energy markets directly by banning oil imports on Monday, and although other Western allies are yet to follow suit, signs of disruptions in Russian oil exports are already showing.
The current oil price differentials are reflecting a clear unwillingness to take Russian crude, and key European financiers have already begun curtailing financing for commodities trades.
The price of oil went above $100 per barrel last Thursday. Several major oil and gas companies, including Shell, have recently announced plans to exit Russian operations, as a result of the limited sanctions on Russian energy exports. The benchmark S&P 500 is down almost 10% so far in the year, with U.S. stocks swinging wildly. Moody's Analytics chief economist Mark Zandi says that the global economic impact from the invasion will be modest, but it will be a different story for the Russian economy. The ruble fell to an all-time low against the dollar on Monday, and the Moscow Stock Exchange was closed for a second day in a row.
It is possible that oil prices will spike closer to $150 per barrel if Russian exports of oil and natural gas are halted. If oil stays at $100 per barrel for a sustained period of time, it could cost US consumers $80 billion more at the gas pump. The national average for a gallon of gas is now at $3.619, up 24 cents from last month, according to data fromAAA.
The energy crisis and oil well above $100 per barrel in the near-term will be kept alive by the fragile situation in Ukraine and financial and energy sanctions against Russia.
Morgan Stanley raised its near-term forecast for oil prices, with the events in Ukraine introducing a risk premium that is likely to remain in coming months.
Russia's invasion of Ukraine has sent energy prices soaring.
This expert predicts that the economic impact from Russia's invasion will be gradual.
BlackRock Warns investors of "Significant Declines" after the Russia stock market crash.
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