Sonali Paul

MELBOURNE, (Reuters) – Oil prices jumped over $2 on Tuesday to a new seven-year high after Moscow sent troops into eastern Ukraine’s two separatist regions. This escalated a crisis western leaders warned would lead to war.

Officials from the U.S., Europe and other countries condemned these actions. However, a Biden Administration official stated that Russia’s military action didn’t yet amount to an invasion which would result in a wider set of sanctions.

The futures price rose 2.2% or $2.10 to $97.49/barrel at 0132 GMT. That’s in addition to Monday’s 2% gain. It reached $97.66 earlier on Tuesday, the highest level since September 2014.

U.S. West Texas Intermediate oil futures surged $3.25 (or 3.6%) to $94.32/barrel versus Friday’s settlement. Monday was a national holiday in the United States.

In an address to Ukraine on Tuesday morning, Volodymir Zelensky, the Ukrainian president, accused Russia of violating Ukraine’s sovereign territory.

His country was looking for a diplomatic resolution to its crisis, but he said he was willing to work hard over the long-term.

Analysts believe the biggest question over the oil market would be whether Russian exports of energy could actually be affected if Moscow invades Ukraine in a large-scale attack and Western governments place sanctions on Russian financial institutions.

Justin Smirk, senior Westpac economist said that there is a lot uncertainty. “Will Russia offer credit?”