Crude oil prices have jumped more than $2 a barrel, lifted by rising tension in Ukraine after Russian president Vladimir Putin declared he had the right to invade his neighbour.
Ukrainian prime minister Arseny Yatseniuk said Moscow's move to use military force was a "declaration of war" by Russia, one of the world's biggest oil producers.
Analysts say Russian supplies of oil to the rest of the world are unlikely to be disrupted by the Ukraine crisis but oil prices rose as most other financial markets tumbled, with investors pulling out of riskier assets such as stocks.
Mr Putin secured permission from his parliament on Saturday to use military force to protect Russian citizens in Ukraine and told US president Barack Obama he had the right to defend Russian interests and nationals, spurning Western pleas not to intervene.
Brent crude hit a peak of $112.10 per barrel, its highest since December 30th, and was up $2.90 at $111.97.
Upward momentum accelerated as the North Sea crude futures contract broke up through a key technical chart point at $111.85 a barrel, which marked a 61.8 per cent Fibonacci retracement of a previous price fall.
U.S. crude jumped as much as $2.16 to $104.75 a barrel, the highest since September 23rd, before easing to $104.50.
The stand-off raised concerns over disruptions of Russian natural gas supplies to Europe, which would see a rise in demand for alternative fuels such as heating oil. The European Union gets roughly a quarter of its gas supply from Russia, mostly piped through Ukraine.
A relatively mild winter in Europe has reduced demand for heating fuel, with storage about 20 per cent above last year’s level at the main European gas hubs.
Russia exports around 5.5 million barrels of crude oil per day. Piped gas exports beyond the former Soviet Union totalled 15.8 billion cubic meters in January, official data showed.
The tensions come at a nervous time for markets as activity in China’s factory sector slowed to an eight-month low in February, a government survey showed, reinforcing signs of a modest slowdown in the world’s second largest economy as demand weakens.
The situation in Ukraine pressured stocks, forcing anxious investors to cut their exposure to riskier assets in favour of traditional safe-haven bets such as the Japanese yen and Swiss franc.