The cost of Brent crude oil and natural gas have surged sharply as markets eye the chance of crucial Russian supplies being cut off – either through tighter Western sanctions or by a defiant President Vladimir Putin.

As UK households already fret over wide-ranging hikes to bills, with a leap of almost £700 in the energy price cap due on 1 April, there have been warnings that Russia’s invasion of Ukraine would to add to them more substantially still.

That is because Russia is a major producer of oil, gas and other crucial commodities such as wheat – with spikes in prices feeding through to products and services in the economy as additional cost burdens are passed on.

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UK contracts for natural gas due in April were, at one stage, 37% up at 398p but still 50p below month-ahead prices seen in December.

Market experts said there was a different reason for a rise of more than 8% in Brent crude oil prices, passing $113 a barrel for the first time since the summer of 2014.

They cited a decision by a major group of oil-producing nations, which includes Russia, to resist calls from big consumers of oil, including the US, for a hike in production to ease prices.

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Weaning Europe off Russian energy will highlight cost of Ukraine invasion at home

The so-called OPEC+ group said it would stick to its plans for a small increase from April.

“Current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current
volatility is not caused by changes in market fundamentals but by current geopolitical developments,” it said, failing to call out the Russian invasion of Ukraine by name.

Brent settled around the $111 figure after the decision by the group, whose big members also include Saudi Arabia.

Shell and BP shares were among those profiting from the rising oil costs as they propped up the FTSE 100 in afternoon trading.

Their stocks were almost 5% up.

Rising oil and gas costs reflect a reliance on Russian supplies, particularly in Europe.

It currently supplies the continent with more than 40% of its natural gas and 25% of its oil needs.

As price rise across the board, attention has again focused on the energy price cap that will rise from an average £1,277 to £1,971 from 1 April.

Energy market research specialist Cornwall Insight said the latest wholesale price spikes for gas meant that it was now predicting a leap to £2,900 for the average user from October.

That is a rise of just under £1,000.

Dr Craig Lowrey, senior consultant at Cornwall Insight, said: “The UK government will need to be ready with ways to mitigate the impact on consumers, with an increase in financial support to households likely to be a necessity, in addition to renewed considerations on support to business customers.”

Neil Wilson, chief markets analyst at markets.com, said of oil’s surge: “Brent rose above $113… as the market digested the full effects of the sanctions and risk of retaliation by Russia and the likely pressure that will be brought to bear on Western governments to ban Russian energy exports.

“Russia is starting a new phase of the campaign, bringing a lot more force to bear and shelling civilian areas. This poses the risk that the West will encounter growing pressure to sanction Russian oil and gas exports, with all that would entail.

“Centrica said it is urgently seeking to end its natural gas supply agreement with Gazprom – self-sanctioning already well underway. Exxon Mobil followed Shell and BP to say it will exit Russia, leaving $4bn in assets in doubt. We are seeing this with the container ships too, and banks. Moreover oil traders are already starting to try to secure alternatives.

“We should note that rising oil prices are a windfall for the Kremlin and Russia’s terms of trade – the ratio of its export to import prices – is at its highest since oil prices fell in 2014. This is one of the reasons why Western governments might play this card – the cognitive dissonance of squeezing Russia on all fronts with sanctions while still funding their war machine by buying oil and gas may not survive for long.”