U.S. oil jumps to highest since 2013, tops $109 a barrel as Russia’s war on Ukraine sparks supply fears

Oil pipelines, pumping rigs, and electrical transmission lines dot the landscape along California’s “Petroleum Highway” (Highway 33) running along the northwestern side of the San Joaquin Valley on April 24, 2020, near McKittrick, California.

The US oil price climbed to the highest level in more than three years during overnight trading Tuesday, as the global benchmark oil price topped $110 per barrel. The advance comes as the Organization of the Petroleum Exporting Countries and its oil- producing allies prepare to meet Wednesday to discuss April's output.

The West Texas Intermediate crude futures jumped more than 5% to trade at $109.23 per barrel, the highest level since September. The contract increased in value by 8.03% to settle at $103.41 per barrel.

The price of global benchmark crude rose to $110.84, the highest level in more than a year. The contract rose 7.15% to settle at $104.97 per barrel.

There is no respite. John Kilduff is a partner at Again Capital.

After Russia invaded Ukraine last Thursday, the price of both crudes surged above $100 for the first time in three years, causing supply fears in a market that is already very tight.

As the War in Ukraine unfolds, a very tight oil market will likely see further risk to supplies, and crude prices can continue to go higher.

On Tuesday member states of the International Energy Agency announced plans to release 60 million barrels of oil reserves in order to alleviate the upward march in oil prices. 30 million barrels will be released by the U.S.

The announcement did not calm the markets.

Goldman Sachs wrote in a note to clients that they don't think this is enough relief.

Demand is recovering and supply is constrained, which has led to a 40% increase in the price of both crudes. After implementing an unprecedented supply cut of nearly 10 million barrels per day in April 2020, the Organization of the Petroleum Exporting Countries and its allies have been slowly returning barrels to the market.

The group has been increasing output by 400,000 barrels per day.

The producer group will likely stay the course with the current easing schedule and avoid wading into the security crisis involving the group co-chair Russia, according to a note to clients.

There could be a strategy shift in the coming weeks if there is a physical supply disruption.

Russia is an important oil and gas producer and exporter. The country's energy complex has not been targeted by sanctions. Some foreign buyers are reluctant to buy energy products from Russia because of the financial sanctions.

CNBC's Patti Domm contributed reporting.