- Oil surged and kept close to $100 a barrel as intensifying sanctions against Russia halted funds to exporters.
- Heavy sanctions affected Russia's oil exports and worsened supply disruption fears.
- Oil has surged in recent days as Russia, the world's third-largest oil producer, invaded Ukraine.
Oil prices rallied Tuesday, with Brent crude rising above $100 once again, as investors worried that intensifying sanctions against Russia over its invasion of Ukraine would disrupt supply.
Brent crude futures were up 3.76% at $101.68 per barrel, while WTI crude futures rose 3.25% to $98.83 per barrel as heavy sanctions imposed by Western powers cut off funds for Russian oil exporters.
"Russia's energy supplies are very much at risk, either due to being withheld by Russia as a weapon or swiped off the market due to sanctions," Louise Dickson, a senior oil market analyst at Rystad Energy, said in a note.
"(The) fragile situation in Ukraine and financial and energy sanctions against Russia will keep the energy crisis stoked and oil well above $100 per barrel in the near-term and even higher if the conflict escalates further," she added.
The US and its allies imposed harsh restrictions on Russia over the weekend. Selected Russian banks were disconnected from the SWIFT system, a messaging network key to making international payments.
At the same time, the powers imposed measures to restrict the Russian central bank from using its $600 billion in international reserves.
The moves are seen as a blow to oil exporters in Russia, the third-largest oil producer in the world, responsible for about 12% of global production. Countries rely heavily on Russia's oil and natural gas for their energy needs.
Oil prices surged as Russian forces moved into neighbouring Ukraine, with Brent crude touching an intraday high of $105.79 and WTI hitting $99.10 on Thursday.
Ceasefire talks held Monday ended without agreement, though another round of talks is planned in coming days. On Tuesday, the invasion entered its sixth day with a huge Russian military convoy moving in on Ukraine's capital city, Kyiv.
"The war in Ukraine is getting very ugly and destructive and hostilities between the west and Russia is intensifying. High risk for disruptions to both crude and natural gas," Bjarne Schieldrop, chief commodities analyst at SEB, said.
Oil demand has increased due to the war, as it is needed to fuel jets and tanks, and for civilians fleeing in their vehicles, according to Rystad Energy.
The International Energy Agency is due to hold an extraordinary meeting later Tuesday to discuss the impact of the Russia-Ukraine conflict on oil markets. It is expected to explore what IEA members can do to stabilize markets, which could mean a release of supply.
That's followed on Wednesday by meeting of OPEC and other producers, including Russia, where the group is expected to carry through with a planned rise in output in April.