Oil prices at 7-year high of $98 after Russia recognises breakaway rebel regions in Ukraine

Oil prices are climbing on fears that the Ukraine-Russia crisis will disrupt supply chains across the world, BBC reported.

Futures of Brent crude, the international benchmark, reached a seven-year high of almost $98 on Tuesday after Russia recognised breakaway rebel regions in Ukraine's east as independent states, BBC reported.

The UK and several western allies have threatened sanctions on the country. Russia is the second largest exporter of crude oil after Saudi Arabia. It is also the world's top producer of natural gas.

The border tensions may have "substantial implications", Sue Trinh of Manulife Investment Management said.

Sanctions forcing Russia to supply less crude or natural gas would have "important impact on the global economy," she added, the report said.

Western powers fear Putin's recognition of the rebel-held areas paves the way for Russian troops to officially enter Ukraine's east.

The self-declared People's Republics of Donetsk and Luhansk are home to Russia-backed rebels who have been fighting Ukrainian forces since 2014.

Russia's move effectively ends peace talks in the region, which has been under a tenuous ceasefire for years.

Equity investors were just as jittery about the developments which come as the global economy is still recovering from the impact of the coronavirus pandemic.

Japan's Nikkei 225 index slipped over 2 per cent. The Shanghai Composite was 1.4 2 per cent lower by mid-day.

Futures for the S&P 500 retreated 1.6 per cent. That of the Dow Jones index fell 1.4 per cent, while Nasdaq 100 futures gave up 2.2 per cent.

A possible war is at the forefront of investors' minds, said Song Seng Wun, an economist at CIMB Private Banking, BBC reported.

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