Oil crosses $105 a barrel, hits 8-year high as Russia attacks Ukraine

Oil prices jumped on Thursday, with Brent rising above $105 a barrel for the first time since 2014, after Russia's attack on Ukraine exacerbated concerns about disruptions to global energy supply. Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two.

The United States and Europe have promised the toughest sanctions on Russia in response.

"If sanctions affect payment transactions, Russian banks and possibly also the insurance that covers Russian oil and gas deliveries, supply outages cannot be excluded," Commerzbank analyst Carsten Fritsch said.

At least three major buyers of Russian oil were unable to open letters of credit from Western banks to cover purchases on Thursday, sources told Reuters. Brent crude was up $7.26, or 7.5%, at $104.10 a barrel as of 1437 GMT, having touched a high of $105.79. U.S. West Texas Intermediate crude jumped $6.63, or 7.2%, to $98.73.

Brent and WTI hit their highest since August and July 2014 respectively.

"Russia is the third-largest oil producer and second-largest oil exporter. Given low inventories and dwindling spare capacity, the oil market cannot afford large supply disruptions," UBS analyst Giovanni Staunovo said.

"Supply concerns may also spur oil stockpiling activity, which supports prices."

Russia is also the largest provider of natural gas to Europe, providing about 35% of its supply. UK Prime Minister Boris Johnson said Britain and its allies would unleash a massive package of economic sanctions on Russia and that the West must end its reliance on Russian oil and gas.

China warned of the impact of tensions on the stability of the energy market.

"All countries that are truly responsible should take responsible actions to jointly maintain global energy security," a Chinese foreign ministry spokesperson said.Global oil supplies remain tight as demand recovers from pandemic lows.