Oil prices jumped as the crisis between Russia and Ukraine escalated.
On Monday evening, Russian President Vladimir Putin ordered forces into two breakaway regions of eastern Ukraine and said he would recognize the independence of Donetsk and Luhansk.
In Asia morning trade Tuesday, U.S. crude surged 3.7% to $94.44 per barrel, while Brent jumped 2.24% per barrel to $97.55.
Rising tensions have sent jitters through markets, driving oil prices higher. On Friday, U.S. President Joe Biden said the U.S. believes Putin has decided to carry out an attack on Ukraine “in the coming days.”
Russia has built up some 150,000 troops along its border with Ukraine, and the Biden administration said last week that as many as 7,000 additional troops have joined.
The military tensions have sparked concerns that Russia may be preparing to invade Ukraine, triggering fears of a repeat of the Kremlin’s illegal annexation and occupation of Crimea in 2014.
Crude prices recently crossed $90 per barrel, representing an increase of more than 20% this year and a rally of more than 80% since the beginning of 2021. Those gains, however, can also be attributed to other factors such as tight supply.
Katrina Ell, senior APAC economist at Moody’s Analytics, said the firm estimated geopolitical tensions have added about $10 to $15 per barrel to oil prices.
“So if we continue to see tensions escalate [causing] various supply disruptions to Russia’s oil and gas supplies, then that will continue to add upward pressure to oil prices and then really hurt Asia’s largest economies from a production point of view and from a consumption point of view as well,” she told CNBC’s “Squawk Box Asia” on Tuesday.
Ell added that most of Asia’s largest economies are net oil importers.