Oil futures have jumped by 3 percent after President Vladimir Putin ordered “partial mobilization” of Russian citizens, marking the biggest escalation since the start of his war in Ukraine.
Putin on Wednesday referenced his potential use of nuclear weapons, saying “those who try to blackmail us with nuclear weapons should know that the prevailing winds can turn in their direction.”
He threatened to use “all the means at our disposal” to defend “Russia and our people.”
In response, Brent crude futures, the benchmark for Nigeria’s crude oil, rose 3.07percent to $93.40 per barrel, and West Texas Intermediate futures added 3.13percent to $86.57 per barrel.
“If the territorial integrity of our country is threatened, to defend Russia and our people, we will use all means we have. This is not a bluff,” Putin said in his address to the nation, according a translation by the BBC.
“The territorial integrity of our motherland, our independence and freedom will be secured, I repeat, with all the means we have.”
The move marks Russia’s first such mobilisation since World War II and signifies the biggest escalation of the war in Ukraine since Moscow launched its invasion in late February.
It follows a string of battlefield setbacks for Russian forces, who have been driven away from areas they had captured in northeastern Ukraine by a sweeping counteroffensive conducted by Kyiv’s troops.
Russia’s war with Ukraine has roiled global oil markets, as Western allies imposed sanctions and bans on Moscow and its energy exports. Brent crude surged above $120 a barrel in early March not long after Russia began its invasion.
The tightness in markets has helped drive an energy crisis in Europe, forcing countries like Germany and France to seek alternative sources of fuel before the winter months. There are concerns that a drawn-out conflict will put more pressure on supplies of oil and natural gas.
Worries about a hit to demand from a slowdown in China’s economy are also weighing on crude oil prices. Beijing has imposed a series of restrictions and lockdowns to curb the spread of COVID-19 that have hampered businesses.
JP Morgan said oil could shoot past $150 a barrel as demand outpaces supply. That’s partly because companies haven’t invested enough in future production, raising the prospect of a major supply deficit ahead.