Oil up $10 per barrel as Russia’s invasion of Ukraine deepens

The price of oil jumped more than $10 a barrel and shares were sharply lower early Monday as the conflict in Ukraine deepened amid mounting calls for harsher sanctions against Russia.

Brent crude oil surged over $10 early Monday. Benchmark U.S. crude was up nearly $9 at more than $124 a barrel.

The surging cost of oil is being felt by Americans at the gas pump, with the average price per gallon hitting $4 on Sunday.

The surge followed a warning from Russian President Vladimir Putin that Ukrainian statehood was imperiled as Russian forces battered strategic locations. A temporary cease-fire in two Ukrainian cities failed over the weekend—and both sides blamed each other.

Oil prices came under additional pressure after Libya’s national oil company said an armed group had shut down two crucial oil fields. The move caused the country’s daily oil output to drop by 330,000 barrels.

U.S. House of Representatives Speaker Nancy Pelosi, meanwhile, said the House was exploring legislation to further isolate Russia from the global economy, including banning the import of its oil and energy products into the U.S.

By late morning in Tokyo, U.S. crude had jumped $9.08, to $124.74 a barrel, in electronic trading on the New York Mercantile Exchange. The all-time high was marked in July 2008, when the price per barrel of U.S. crude climbed to $145.29.

Brent crude, the international standard, hit $139.13 per barrel before falling back. It was trading up $10.56, at $128.67 a barrel.

U.S. futures fell, with the contract for the benchmark S&P 500 down 1.6% and that for the Dow industrials falling 1.3%.

Higher fuel costs are devastating for Japan, which imports almost all its energy. Japan’s benchmark Nikkei 225 dipped 3.5% in morning trading to 25,091.93.

Hong Kong’s Hang Seng dropped 4%, to 21,021.38, while South Korea’s Kospi dived 2.5%, to 2,648.48. Australia’s S&P/ASX 200 shed 1.2%, to 7,023.10. while the Shanghai Composite lost nearly 0.8%, to 3,421.81.

“The Ukraine-Russia conflict will continue to dominate market sentiments and no signs of conflict resolution thus far may likely put a cap on risk sentiments into the new week,” said Yeap Jun Rong, market strategist at IG in Singapore.

“It should be clear by now that economic sanctions will not deter any aggression from the Russians, but will serve more as a punitive measure at the expense of implication on global economic growth. Elevated oil prices may pose a threat to firms’ margins and consumer spending outlook.”

Markets worldwide have swung wildly recently on worries about how high prices for oil, wheat and other commodities produced in the region will go because of Russia’s invasion, inflaming the world’s already high inflation.

Russian forces intensified shelling of cities in Ukraine’s center, north and south, according to a Ukrainian official, as a second attempt to evacuate civilians collapsed. Russia has made significant advances in southern Ukraine and along the coast, although many of its efforts have stalled, including an immense military convoy north of Kyiv.

Companies have been exiting Russia, including Mastercard and Visa, as well as Netflix. The conflict in Ukraine also threatens the food supply in some regions, including Europe, Africa and Asia, which rely on the vast, fertile farmlands of the Black Sea region, known as the “breadbasket of the world.”

Wall Street finished last week with shares falling despite a much stronger report on U.S. jobs than economists expected. The S&P 500 fell 0.8%, to 4,328.87, posting its third weekly loss in the last four. It is now down just under 10% from its record set early this year.

The Dow, initially fell more than 500 points. It closed 0.5% lower, at 33,614.80. The Nasdaq fell 1.7%, to 13,313.44. The Russell 2000 index of small companies dropped 1.6%, to 2,000.90.