- New Western sanctions against Russia pushed oil and gas prices sharply higher Monday.
- The US and its allies agreed to exclude a number of Russian banks from the SWIFT system, which could choke the country's energy exports.
- Goldman Sachs noted the SWIFT ban still leaves some Russian banks with access to the system.
Oil and gas prices jumped Monday after Western nations escalated sanctions against Russia, once again raising fears that retaliatory measures could disrupt energy shipments.
Brent crude futures last rose 4% to $98.35 a barrel after hitting a high of $105.07 a barrel earlier in the session. West Texas Intermediate rose 4.4% to $95.64 a barrel, down from $99.10 a barrel earlier on.
The US, European Union, the UK, and Canada agreed on Saturday to remove some Russian banks from the SWIFT financial system, meaning that the country's ability to carry out business with others would be affected.
Ursula von der Leyen, president of the EU Commission, said the move was made to "cripple Putin's ability to finance his war machine" and would block Russian international trade.
"Growing concerns about disruptions to Russian energy supplies are pushing oil and gas prices up sharply," said Commerzbank's Carsten Fritsch.
European natural gas prices soared by 36% to 119 euros ($133.43) per megawatt-hour at Monday's open, and was still trading at that level at last check, Fritsch said.
"The marked price increases are due to the sanctions imposed on Russia by the West, which were tightened significantly again at the weekend," Fritsch said.
Moreover, the EU is also set to freeze Russia's central bank assets in the region, making it impossible for the establishment to liquidate foreign exchange assets.
Goldman Sachs noted the exclusion of some Russian banks from the SWIFT system creates hurdles, but not barriers to commodity trading. What's key is that some banks still do have access to the system, meaning there are likely carve-outs for energy and food transactions, Goldman analysts said.
"The absence of SWIFT intermediation would, for example, leave for slower payments and the rise in account receivables for Russian commodity exporters (rather than a complete halt in financial transfers)," they wrote Sunday.
But some analysts expect Russia to retaliate to this latest round of restrictive measures by either reducing or completely suspending energy shipments to Europe.
"The sanctions and the exodus of Western oil companies are likely in the medium to long term to result in lower Russian oil and gas production because they will make investments in maintaining production and developing new sources significantly more difficult," Fritsch said.
While Russia's invasion of Ukraine has left markets reeling, the OPEC+ group, which includes Russia, is due to meet on March 2. The group is expected to stick to an existing agreement to add a joint 400,000 barrels per day to oil supply in April, according to Reuters.
Insider's live blog of the invasion is covering developments as they happen.