Peter Nurse

Investing.com — Oil prices soared higher Monday as the fresh sanctions levied on Russia by the Western powers intensified fears of disruptions to energy supplies from the world’s second largest crude producer.

After jumping up to $100, futures had fallen 5.1% and traded at $96.25/barrel by 5 AM ET (1100 GMT). The contract had risen 5% to $98.81 as the contract was 5% higher.

At $2.9791/gallon, they were up 3.6%

In response to Russia’s continuing bombardment of Ukraine by Russia, Western countries announced that they would continue to sanction Moscow. They also excluded some Russian banks and thereby repelled the use of the for transactions in trillions of US dollars worldwide.

“Whilst the U.S. has said that there will be exceptions made for Russian energy exports, the market is clearly nervous given that sanctions are becoming increasingly restrictive,” said analysts at ING, in a note. “The growing risk of sanctions has reduced the appetite of many in the industry to commit to Russian oil.”

Goldman Sachs responded by raising its Brent crude oil price forecast from $95 to $115 per barrel.

“Commodity markets need to reflect not only these difficulties in paying for Russia’s exports but, with little left to sanction, the risk that Russian commodities eventually fall under Western restrictions,” Goldman said.

Russia is responsible for 10% of global oil supplies. Any interruption to the supply of this oil is most likely to seriously impact a market that’s already experiencing difficulties meeting rising demand.

Russian President Vladimir Putin heightened tensions on Sunday when he ordered his country’s “deterrence troops,” code for nukes, to be on high alert.

Concerns about global supply place this week’s meeting of the Organization of the Petroleum Exporting Countries and allied producers, including Russia, firmly into focus.

There is likely to be some pressure on the members of the group, known as OPEC+,  to increase output more aggressively when they meet on Wednesday, given the current situation in eastern Europe and the high price environment.

“However, comments from some OPEC+ members suggest that they will stick to increasing output by 400Mbbls/d since the current high price environment reflects geopolitical risks rather than supply and demand imbalances,” said ING.

The extent to which Russia’s move into Ukraine has upset the equilibrium in the energy markets was illustrated by BP’s (LON:) announcement that it will exit its stake in oil giant Rosneft.

Rosneft is a state-owned oil company and accounts for approximately half of BP’s natural gas and oil reserves. It also produces around a third. The sale of the 19.75% stake will end three decades of cooperation between the companies, and could lead to charges up to $25 Billion.

The sudden move brings attention to other Western companies with Russian operations.