Oil prices surged on Tuesday despite new measures aimed at calming markets worried by the invasion of Ukraine.
Brent crude – the international benchmark for oil prices – jumped 10% to $107 a barrel, marking the highest level seen in more than seven years.
It rose after the International Energy Agency’s members agreed to release 60 million barrels of oil from emergency stockpiles.
Russia is one of the biggest energy producers in the world.
As a result, concerns about Russia’s invasion of Ukraine have sparked concerns among investors that oil or gas supplies could be affected.
Price rises were steeper in the US, where West Texas Intermediate crude increased by 11% to $106 a barrel.
The United States and 30 other member countries of the International Energy Agency (IEA) agreed to release the oil in a bid to stabilize energy markets worldwide.
“We are prepared to use every tool available to us to limit disruption to global energy supply as a result of President Vladimir Putin’s actions,” White House spokeswoman Jen Psaki said on Tuesday.
She added that Washington would carry on looking at how to speed up moving energy supplies away from Russia.
Another statement by the IEA noted that the invasion of Ukraine came against a “backdrop of already tight global oil markets, heightened price volatility, commercial inventories that are at their lowest level since 2014”.
Petrol price movements in the UK are mainly determined by the price of crude oil, which is the raw material for fuel, and the exchange rate between the dollar and the pound, because oil is traded in dollars.
On Monday, the RAC said the average price of petrol had jumped to a record high of £1.51 a litre on Sunday, while diesel increased to £1.55.
Share prices across Europe and the US also fell further on Tuesday as attacks on cities in Ukraine continued.
Markets in US, Europe and UK fell amid fears about the impact of the ongoing conflict.
Having been up in early trading, the FTSE 100 turned negative amid the warnings of the consequences of Western sanctions on Moscow and signs that Russia was stepping up its invasion of Ukraine.
Western countries have imposed punishing sanctions against Moscow, with another raft of companies winding down Russian operations and halting investment, such as BP and Shell.
Frankfurt saw steeper losses, which analysts suggested could be linked to Germany’s reliance on Russian energy imports.
Russia’s currency was stable, however, having collapsed 30% on Monday to record lows against major currencies. One rouble was worth less than one US cent in trading on Tuesday.
The rouble’s fall cuts its buying power and hits savings of ordinary Russians. The decline was only halted when Russia’s central bank doubled interest rates to make the currency more attractive to investors.
The sanctions’ stranglehold on Moscow’s finances has hit the central bank’s access to a lot of Russia’s huge reserves of money held in the form of foreign currencies.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “This is a fast-moving situation and investors should be mindful of potential share price volatility in the short to medium term.”