A leading economist has warned that oil prices could top $140 a barrel if the Russia-Ukraine crisis continues to escalate.
Brent crude surged above $99 a barrel for the first time since 2014 yesterday before easing back slightly.
Analysts now expect prices to break through the $100 mark in the coming days, with further significant rises should Russia mount a full scale war on its neighbour.
Escalation
Edward Gardner, a commodities economist at Capital Economics, said yesterday that that Europe and Russia's mutual energy dependency could be "thrown out the window" in the event of further escalation.
"It is not in the economic interests of either Russia or the West to use trade in energy as a weapon against each other," he said.
"But that is not to say it won’t happen. If energy flows were disrupted, we think oil prices could settle at around $120-140 per barrel, before coming back down as trade flows re-route."
He added: "Russia and the West (particularly Europe) have significant energy ties and a mutual dependence. However, either side could throw economic caution to the wind and directly target energy flows.
"This could happen if Russia conducted a large-scale invasion of Ukraine, and Europe and the US put aside their concerns about energy security. Or it could happen if Russia decided to respond aggressively to Western sanctions."
Click here to read the full note from Capital Economics