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Oil prices soar as western allies discuss Russian import ban Brent crude hits $139 as Moscow says it

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Oil prices soared on Monday to more than $139 a barrel after the US said it was in “active discussions” to ban Russian crude imports, shaking markets as Moscow claimed it would pause bombing in Ukraine to allow civilians to escape four frontline cities.

The international benchmark Brent surged to $139.13 a barrel on Monday morning, almost 20 per cent above its settlement price on Friday, hitting its highest level since the 2008 financial crisis.

The jump came after US secretary of state Antony Blinken said on Sunday he was discussing an oil ban with allies and US president Joe Biden. The White House had previously been reluctant to consider the move, warning it would drive up prices for consumers.

Markets reacted sharply, with stocks tumbling and the euro falling in early trading as investors calculated the consequences of a protracted rise in energy prices. Hong Kong’s Hang Seng index fell 3.9 per cent, closing at the lowest level since 2016.

European wholesale natural gas prices also soared, with futures jumping to a new record high of €335 a megawatt hour from about €193 on Friday — a jump of 74 per cent. A year ago, the price was about €16.

Europe’s Stoxx 600 share index dropped 3 per cent on Monday, leaving it down 10 per cent since Russia launched a full-scale invasion of Ukraine on February 24. Futures tracking Wall Street’s blue-chip S&P 500 index fell almost 2 per cent.

Any restrictions on the oil trade would pile pressure on Russia’s increasingly isolated economy, which has been hit hard by sanctions, and a growing corporate boycott that this weekend was joined by payments giants Mastercard, Visa and American Express.

Asked about Blinken’s comments, a senior French official said further sanctions were being examined by European and “other” partners, without detailing how advanced the discussions were.

“The question today is to see how we can resort to strategic reserves to stop prices from spiralling even further on oil and gas markets, and also, in the longer term, how we manage our stocks and our supplies,” the official said.

British officials are not ruling out a total ban on Russian oil imports but one described the idea as “a drastic move”. Liz Truss, UK foreign secretary, has asked officials to explore a “ceiling” on Russian energy imports that would fall over time, mitigating the likely economic shock.

The turmoil in commodity markets came as Russia offered to suspend attacks on Kharkiv, Kyiv, Sumy and Mariupol on Monday morning and create humanitarian corridors out of the cities, amid growing international alarm over the civilian toll of Vladimir Putin’s invasion.

Russia declared its temporary ceasefire would start at 10am Moscow time, but it is unclear how many Ukrainian civilians would want to take up the Russian offer. Most of the humanitarian corridors Moscow is creating end up in Russia itself.

“Of those who are left in Kharkiv, no one is going to want to go to Russia,” said Andriy Kluchko, a resident of the city. He also questioned the need for a corridor out of Kharkiv, since it was not fully encircled and the road leading west to Poltava was still open.

Meanwhile, Russia received strong backing from China, which has bucked international calls to condemn Putin’s invasion of Ukraine. Wang Yi, China’s foreign minister, defended China’s “everlasting friendship” with Russia and slammed the US for trying to establish an “Indo-Pacific version of Nato”.

He reaffirmed an “unequivocal message to the world that China and Russia jointly oppose attempts to revive the cold war mindset”.

“No matter how precarious and challenging the international situation may be, China and Russia will maintain strategic focus and steadily advance our comprehensive strategic partnership co-ordination for a new era,” he said.

Through 12 days of war, Russian forces have used heavy weapons to bombard civilian infrastructure in crowded cities, hitting schools, hospitals and residential buildings. Shelling continued at a high intensity over the weekend, according to western officials, while Russia resupplied its armoured forces positioned around Kharkiv and Kyiv, potentially preparing for a renewed offensive.

An intelligence update from the UK Ministry of Defence accused Russia of targeting Ukraine’s communication infrastructure to “reduce Ukrainian citizens’ access to reliable new and information”.

It said Russia reportedly struck a television tower in Kharkiv on Sunday, suspending broadcasting output.

So far, more than 1.5mn Ukrainians have fled the country, with close to 1mn crossing the border into Poland. The refugee crisis is the fastest growing in Europe since 1945, according to the UN.

Russia said its offer of a ceasefire followed “a personal request” from French President Emmanuel Macron, who spoke to Vladimir Putin on Sunday.

But there was widespread scepticism in Ukraine about the Russian move. Over the weekend Russia had announced a temporary halt to shelling in the besieged port city of Mariupol, but the planned evacuation of civilians was suspended after multiple violations of the ceasefire.

Residents of the frontline city, which is completely surrounded by Russian troops, have faced shortages of food, water, electricity and heating in freezing weather.

The official Russian statement on the ceasefire said the humanitarian corridor out of Kyiv would lead north to the Belarusian city of Gomel and from there by air to Russia. From Kharkiv the route is to the Russian city of Belgorod. From Mariupol there will be two corridors — one going to the Russian city of Rostov, and the other west to Zaporizhzhia. From Sumy there are two routes — to Belgorod in Russia and to Poltava in Ukraine.

But early signs on Monday morning were that the ceasefire was not holding. “Sporadic shelling is continuing in Mariupol,” said Vitaly Falkovsky, an official in the city.