Oil prices surged close to $100 (£73) and global stock markets fell in early trading on Tuesday after Vladimir Putin sent troops into Ukraine, rattling investors.
Brent crude oil was up nearly 4% on Tuesday morning, hitting just above $99 a barrel, the highest in more than seven years, as fears mounted that supplies would be disrupted.
After sharp falls on Monday, the benchmark Moex Russia Index was down more than 5% on Tuesday morning, while a broad sell-off of European shares followed earlier losses in Asia. Germany’s DAX, France’s CAC and Italy’s FTSE MIB fell about 1%.
In London, the FTSE 100 index was down by 0.4%, as oil and gas companies Shell and BP were among the top risers in the UK’s index of blue-chip stocks.
The Russia-focused gold miner Petropavlovsk was the biggest faller in the FTSE 250 in early trading, with investors wiping almost 13% off its market value. Shares in Ferrexpo, which mines iron ore in Ukraine for the steel industry, fell 3%.
By lunchtime most European indices had clawed back earlier losses and were trading roughly flat, although Russia’s Moex was down more than 4%.
Analysts expect Brent crude will reach $100 a barrel in the coming days, amid supply fears. The price was last above that level in early September 2014.
US light crude jumped 5.2% at $95.81. European gas prices surged as much as 13% over fears energy supplies could be restricted as the conflict deepens.
Russia is responsible for a third of Europe’s natural gas and about 10% of global oil production. About a third of Russian gas supplies to Europe usually travel through pipelines crossing Ukraine.
“The intensifying crisis between Russia and Ukraine has raised concerns about the supply disruptions that would ensue as sanctions look set to cripple Russia, the world’s second largest oil exporter and the world’s top natural gas producer,” said Victoria Scholar, the head of investment at Interactive Investor.
“If Putin continues his aggression and the threat of war becomes a reality, oil prices could easily push beyond $100 towards $120 a barrel to fresh highs not seen since 2014.”
A wave of international sanctions are expected after Putin moved troops into two Russian-controlled territories in eastern Ukraine, Donetsk and Luhansk, to perform “peacekeeping duties” after signing a treaty recognising their independence.
Sajid Javid, the health secretary, said the move meant that the “invasion of Ukraine has begun”.
“We’re waking up to a very dark day in Europe,” he told Sky News on Tuesday morning. “President Putin has decided to attack the sovereignty of Ukraine and its territorial integrity. We can already tell he has sent in tanks and troops, so I think you can conclude that the invasion of Ukraine has begun.”
Boris Johnson chaired an emergency meeting of the Cobra committee on Tuesday morning to establish the UK’s response.
In Asia, Japan’s Nikkei lost 1.7%, Hong Kong’s Hang Seng tumbled 2.9%, the Shanghai Composite Index fell just over 1% and South Korea’s Kospi dropped 1.35%.
