Muscat – Oil prices surged close to US$100 per barrel on Tuesday as major crude producer Russia prepared to send troops into two breakaway regions of Ukraine, sparking Western nations to ready economic sanctions against Moscow.

Brent North Sea crude oil reached US$99.50 per barrel, the highest level in seven years. At around 3pm, it pulled back to just below US$98, still a gain of around 2.5 per cent compared with late Monday.

Oman oil price (April 2022 delivery) on Tuesday reached US$96.51, an increase by US$4.27 from Monday’s price.

“The intensifying crisis between Russia and Ukraine has raised concerns about the supply disruptions that would ensue as sanctions look set to cripple Russia, the world’s second largest oil exporter and the world’s top natural gas producer,” noted Victoria Scholar, head of investment at Interactive Investor.

German Chancellor Olaf Scholz said he was suspending the Nord Stream 2 pipeline project with Russia in response to Moscow’s recognition of breakaway regions Donetsk and Lugansk.

Ukrainian President Volodymyr Zelensky had demanded an immediate halt to the project, set to pipe Russian natural gas to Germany via the Baltic Sea.

Zelensky said Russia must be punished for its recognition on Monday of Ukraine’s two separatist-held regions with “immediate sanctions” that include “the complete stop of Nord Stream 2”.

It came as the United States, Britain and the European Union prepared to launch economic sanctions on Russia.

“Our response will be in the form of sanctions, whose extent the ministers will decide,” EU foreign policy chief Josep Borrell said.

Russia’s recognition of the breakaway regions of Ukraine will meanwhile “strongly increase” economic uncertainty for the EU, the bloc’s economy commissioner Paolo Gentiloni said.

Russian troops were believed to be deploying into Donetsk and Lugansk in eastern Ukraine.

(With inputs for AFP)