NEW YORK — Oil prices shot up more than $5 a barrel Thursday, rising to the highest level in more than two weeks as escalating tensions with Russia stoked fears of supply disruptions to the West.
Crude’s rally mimicked the wild price swings seen last month and at least temporarily halted oil’s slide back toward $100 a barrel.
A weaker U.S. dollar and worries about tightening output from the Organization of Petroleum Exporting Countries are also supporting prices.
After days of brushing off geopolitical flare-ups and a tropical storm, oil spiked above $122 a barrel as traders became rattled over increasingly hostile Russian rhetoric toward a U.S.-Poland deal to install a missile defense system in Eastern Europe — a move Moscow views as a threat.
The continued presence of Russian troops in Georgia — a key conduit for Western-bound oil shipments — injected even more bullish sentiment into a market that had appeared to be losing momentum on the idea that high energy prices were curbing demand.
Oil watchers said the market’s sudden reaction to the standoff reflects a growing acknowledgment of Russia’s bearlike influence over world energy supplies.
“People are finally realizing that this Russian situation has the potential to be bad for a very long time,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn. “The Russians have shown evidence that they’re willing to cut off energy supplies to advance their aims.”
Light, sweet crude for October delivery jumped $5.62 to settle at $121.18 a barrel on the New York Mercantile Exchange after earlier rising as high as $122.04, crude’s highest trading level since Aug. 4.
