European leaders eye Russian oil and gas in Ukraine invasion response

European leaders are eyeing the Russian oil and gas sector in their response to the invasion of Ukraine on Feb. 24 with tougher sanctions.

UK Prime Minister Boris Johnson said in a television statement on the BBC that Western allies were preparing sanctions to "hobble" Russia's economy following the overnight military escalation, adding "to that end we must collectively cease the dependence on Russian oil and gas that for too long has given Putin his grip on Western politics."

The British leader's remarks coincided with his French counterpart, President Emanuel Macron, signaling that energy would be a target for economic sanctions.

"The sanctions taken against Russia [will be] in the military and economic sphere as well as in the domain of energy," said Macron in a television address.

Factbox: Crude prices climb as Russia 'invades' Ukraine

Russia is the largest single supplier of oil and gas to European countries and a major exporter of petroleum products to the US, according to the latest data. Around 48% of the approximate 6.5 million b/d of Russian oil and condensates exports are shipped to customers in Europe and the US.

April ICE Brent crude futures 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, having crossed $100/b earlier in the day to reach an intra-day high of $100.53/b.

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

Ahead of remarks by Johnson and Macron, Russia's main gas exporter Gazprom said its shipments would remain uninterrupted. It added that deliveries on Feb. 24 are set at 83 million cu m, a 31% increase on Feb. 23.

Europe's TTF gas price made huge gains in early trade Feb. 24 after Ukraine said Russia had launched a full-scale invasion of the country. The TTF March price rose by as much as 35% in early trading, reaching Eur120/MWh, according to ICE data. The March contract was 28% higher at Eur114/MWh as of 0730 GMT.

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.

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.