Brent crude crosses seven-year highs, above $105/b after Russia invasion

1130 GMT: ICE Brent crude futures crossed a seven-year high to trade above $105/b in London trading on Feb. 24, after Ukrainian officials said Russia had launched an invasion, triggering fears of supply security across Europe.

April ICE Brent crude reached an intraday high of $105.79/b in early European trading, up 9% from the previous close. The contract was trading at $105.14/b as of 1124 GMT. April Nymex WTI was at $99.94/b at the same time, just hours after Russia launched attacks on Ukraine following weeks of uncertainty and tension. April Nymex WTI had crossed $100/b earlier in the day, reaching an intra-day high of $100.53/b.

Oil prices were last seen at these levels in early-August 2014, when Moscow was first sanctioned by the US and Europe for interfering in Ukraine and supporting separatists in Donetsk.

Oil is following European gas prices, which made huge gains in early trading Feb. 24. The TTF March gas price rose by as much as 35% early Feb. 24 and was up by 31% at Eur117/MWh ($130.56/MWh) as of 1127 GMT.

Europe is dependent on Russian gas imports during high periods of winter demand and a major importer of Urals crude to feed refineries in the world's second-largest economic block. Any tougher US and European sanctions on Moscow could make it harder for commodities to be traded by targeting banks and transaction processes across borders.

Waiting for sanctions

The market is anxiously waiting to see if the West will apply sanctions against Russia's lucrative oil and gas sector and its payment system. But for now, flows of Russia's crude, refined products and natural gas are continuing as per normal.

S&P Global Platts Analytics does not anticipate a notable supply curtailment from Western sanctions or Russia holding back large volumes but acknowledged that the oil markets are understandably on edge due to Russia's outsized market position and 2.7 million b/d of crude exports to Europe.

"However, financial restrictions could cause temporary dislocations as buyers seek legal clarity, which would leave markets feeling even tighter," it added in a recent note.

"If sanctions affect payment transactions...supply outages cannot be excluded," said Carsten Fritsch, a commodity analyst at Commerzbank. This would include sanctions on certain Russian banks and the insurance on Russian oil and gas deliveries, he added.

Platts Analytics has said its base case demand forecast continues to assume global crude growth of 4.1 million b/d in 2022. However, under a limited incursion scenario in Ukraine, global demand growth could ease by 0.7 million b/d.

Ukraine is also an important transit point for crude into Central and Eastern Europe. The country ships Russian oil to Slovakia, Hungary and the Czech Republic via the southern leg of the key 25 million mt/year Druzhba pipeline.

Russian crude is also exported via sea through two quotes - Primorsk and Ust Luga on the Baltic Sea and Novorossiisk on the Black Sea. Russia is also a key exporter of diesel and fuel to Europe and the US.

Ahead of the attacks, US officials had signaled another potential release of crude from the country's vast Strategic Petroleum Reserve to help ease prices.

Russia, through its participation in the OPEC+ alliance, has restricted supply of crude along with Saudi Arabia and the oil-rich Gulf states to boost prices.