Crude oil and natural gas prices have soared amid investor concerns that Russian aggression against Ukraine would hurt exports from Russia, one of the world's largest oil and gas exporters.

Global benchmark Brent crude oil futures scaled the $100 a barrel mark on Wednesday for the first time since 2014 after Russian President Vladimir Putin ordered a military attack on Ukraine.

The latest escalation in the Ukrainian crisis cast a gloom on global stock markets, which tumbled as investors took refuge in safe havens like gold, US Treasury bonds, the US dollar and the Japanese yen.

Russian forces attacked several targets across Ukraine after Putin ordered strikes on Ukrainian military installations, an assault that Ukrainian President Volodymyr Zelenskyy described as a "cynical invasion."

US President Joe Biden has warned that Washington and its allies would impose "severe sanctions" on Moscow.

"The market reaction to these developments has been seismic," Deutsche Bank analyst Jim Reid said in a note "there had been a more positive tone 24 hours ago during the European morning, but that turned shortly after the US open, after news came through from Ukraine that numerous websites had suffered a distributed denial-of-service attack."

European stocks fell 3% in early trading on Thursday with the benchmark STOXX 600 index falling to its lowest level since May 2021 amid concerns that the Russian offensive and ensuing Western sanctions would lead to further fuel price rises and hurt the global economic recovery.

Germany's DAX was among the biggest losers in the region, reflecting the country's heavy reliance on Russia for its energy needs.

Oil prices fuel inflation concerns

Brent crude oil prices jumped more than 6.5% to trade at $103.18 a barrel at 0830 GMT (0930 CET), while US benchmark West Texas Intermediate (WTI) crude futures jumped 6% to $97.58 per barrel, making a remarkable comeback in less than two years after crashing to below zero a barrel during the COVID-19 pandemic.

The Brent reached the milestone despite positive developments around the revival of the Iran nuclear deal that could bring about a million barrels of oil into the market.

Traders fear the conflict could disrupt global energy supplies given that Russia is among the world's top three oil producers and a major oil and natural gas exporter, especially to Europe, which gets more than a third of its gas supply and about a quarter of its oil from the country.

So far oil and gas supplies from Russia haven't been specifically targeted by Western sanctions imposed after Russia ordered troops into eastern Ukraine, but that could change if the Western allies ramp up their sanctions. In the past, the US has been swift in imposing sanctions on oil from Venezuela and Iran.

Russia’s full-scale invasion of Ukraine immediately puts "at risk up to 1 million bpd of Russian crude oil exports transiting through Ukraine and the Black Sea," Rystad Energy’s oil market analyst Louise Dickson said.

"Prices are only set to climb further on low storage inventories and export disruptions. Prices could approach $130 per barrel by June if the Ukrainian conflict disrupts Russian crude flows, but that estimate could soar higher if additional disruptions materialize," Dickson added.

The invasion comes as oil markets face a major supply deficit prompted by a swift rise in post-pandemic oil demand and major oil producers, including Russia, struggling to boost production. The steep rise in oil prices would only give further headaches to policymakers fighting decades-high inflation.

"In an extreme scenario, the impact of the Ukraine crisis on energy prices could add up to two percentage points to the peak in headline eurozone inflation this year, and one-and-a-half percentage points over the year as a whole," Jack Allen-Reynolds from Capital Economics wrote in a note to clients on Wednesday.

Gold rises, Bitcoin falls

Gold prices climbed nearly 2% to their highest level in more than a year, underscoring its safe-haven appeal to investors fleeing risky assets like shares.

Aluminum prices soared as much as 5% to a record high, surpassing the peak it hit in 2008 during the global financial crisis as market participants feared that sanctions against Russia and retaliatory measures from Moscow could disrupt global aluminum supply. Russia produces around 6% of the world's aluminum. Hong Kong-listed shares of Russian aluminum producer Rusal crashed about 11 % on Thursday.

Bitcoin, which its backers tout as a safe haven from geopolitical tensions, fell by as much as 8% to $34,324, its lowest level since January. Other cryptocurrencies also followed Bitcoin into taking a beating with Ether falling as much as 11%.

The Russian ruble fell to a record low of 89.60 per US dollar before an announcement from the Russian central bank that it would support the currency with foreign currency interventions helped it recover some of the lost ground.

Wheat price rise fuels food crisis worries

Wheat futures soared almost 4% to a nine-year high in Chicago on Wednesday as the Russian offensive raised the specter of supply disruptions.

Russia and Ukraine together account for about 30% of global wheat exports. Both are key suppliers of wheat to the Middle East and Europe. Turkey and Egypt are the largest importers of Russian wheat.

Experts fear that Russian military operations would further increase food prices in countries like Libya, Yemen, and Lebanon, deepening the food crisis in those countries.

Meanwhile, on Thursday, China approved imports of wheat from all regions of Russia to help shield itself from Western sanctions against Moscow.

With inputs from Reuters news agency

Edited by: Hardy Graupner