Stock markets have sunk as soaring oil and gas prices spark fears of a global economic shock from Russia’s invasion of Ukraine.
Oil prices soared to $139 a barrel, the highest level for almost 14 years, while wholesale gas prices for next-day delivery more than doubled.
It came as the US hinted at a ban on buying Russian energy, as it looked to other countries to increase supplies.
Petrol prices hit another record high, amid warnings of higher energy bills.
The market turmoil is fuelling concerns that the price of many everyday items from food to petrol and heating, already rising at their fastest rate for 30 years, could be pushed higher.
Analysts have already warned that UK energy bills could reach as high as £3,000 a year due to the surge in oil and gas prices.
Russia is the world’s second top producer of crude oil after Saudi Arabia, and supplies about a third of Europe’s needs. The price of Brent crude rose by more than a fifth last week amid fears of a reduction in Russian supplies.
The average price of a litre of petrol at UK pumps has hit 155p for the first time, the AA motoring group said, pushing the cost to more than £7 a gallon.
The AA said filling up a car with a 55-litre tank now cost nearly £17 more than a year ago, rising from £68.60 to £85.59.
The boss of fuel delivery firm Portland Fuel, James Spencer, told the BBC he thought fuel prices could reach £1.70-£1.75 a litre. “Even if we can get extra [oil] supplies on to the market, nothing will happen quickly.”
He said that, to a certain extent, individual car drivers have options to cut their use by driving less, but added that businesses that have no alternatives were really starting to feel the squeeze.
The crisis continues to cast a shadow over share markets. The main stock exchanges in France and Germany sank more than 4% in early trading, while London’s FTSE 100 was more than 2% lower. Asian shares also fell.
The price of gold, a haven in troubled times for investors looking for security, hit $2,000 an ounce for the first time in almost 18 months.
On Sunday, the US Secretary of State Antony Blinken said the Biden administration and its allies were discussing a ban on Russian oil supplies.
The comments came as pressure grows on the White House and other Western nations to take tougher action against Moscow over its invasion of Ukraine.
A Russian oil embargo would be a major escalation in the response to the invasion of Ukraine and would potentially have a major impact on the global economy.
“While the US might just push through a ban on Russian oil imports, Europe can ill-afford to do the same. More worryingly, [Russian leader Vladimir] Putin, with his back to the wall, could turn off gas supplies to Europe, cutting off the continent’s energy lifeline,” Vandana Hari at oil markets analysis firm Vanda Insights told the BBC.
On Sunday, energy giant Shell defended its decision to purchase Russian crude oil despite the invasion of Ukraine.
The company said it was forced to buy oil from Russia in order to maintain timely supplies of fuel to Europe.
“To be clear, without an uninterrupted supply of crude oil to refineries, the energy industry cannot assure continued provision of essential products to people across Europe over the weeks ahead,” a spokesperson added.
A possible ban on buying Russian oil has intensified pressure to find alternative supplies.
The US is this week expected to press Saudi Arabia to increase crude production, and there is fresh impetus for a deal over Iran’s nuclear ambitions that would lift sanctions on its oil exports.
However, progress on a deal has been hampered after Russia sought a US guarantee that the sanctions it faces over the Ukraine conflict will not affect its trade with Tehran.