Oil surges above $100 for the first time since 2014, before paring gains

Oil prices on Thursday jumped following Russia's invasion of Ukraine, with international benchmark Brent crude surpassing $100 a barrel for the first time since 2014. Prices retreated during afternoon trading on Wall Street after President Joe Biden said there are not currently plans to target Russia's energy complex with sanctions.

The attack is expected to have far-reaching implications for energy markets given Russia's role as the world's second-largest producer of natural gas and one of the world's largest oil-producing nations.

Oil prices have jumped more than $20 a barrel since the start of the year amid escalating Russia-Ukraine tensions. Now, it is feared a wave of international sanctions on Russia's energy sector could disrupt supplies.

Brent crude futures rose more than 8% at one point to hit a session high of $105.79 per barrel, the highest level since August 2014. U.S. West Texas Intermediate crude futures, meanwhile, climbed over 9% to trade as high as $100.54, a price last seen in July 2014.

Both contracts retreated during afternoon trading on Wall Street. WTI settled the day 71 cents, or 0.77%, higher at $92.81 per barrel. At one point the contract dipped into negative territory. Brent crude gained 2.3% to settle at $99.08 per barrel.

Natural gas prices popped 6.5%. Spot gold, traditionally seen as a safe-haven asset, climbed 2.6%, last trading at $1,957.46 per troy ounce.

Russian President Vladimir Putin launched an attack on Ukraine early Thursday local time after months of military buildup along the border they both share. The directive came days after the Kremlin leader formally recognized the independence of two pro-Moscow separatist regions in eastern Ukraine.

Explosions were heard in Ukraine's capital of Kyiv, NBC News reported. The crisis in Ukraine is changing rapidly and specific reports from the country are difficult to confirm.

Ukrainian Foreign Minister Dmytro Kuleba said via Twitter on Thursday that Putin had "launched a full-scale invasion," of the country, which he described as "a war of aggression." Kuleba called on world leaders to stop the Russian president. "The time to act is now," he said.

The United States, Canada, Britain, the European Union, Australia and Japan were among the countries to announce the first wave of sanctions against Russia earlier this week, targeting banks and wealthy individuals.

A second barrage of measures is widely expected shortly, although some analysts believe Western governments will likely exempt energy transactions from the sanctions.

The International Energy Agency said earlier this week that while the specific impact on world oil markets was "yet to be determined," member countries were on standby "to act collectively to ensure that global oil markets are adequately supplied."

"At this stage it is anything but clear what could bring the Russian president to his senses, therefore the situation, the equity and oil markets will remain volatile," Tamas Varga, senior analyst at PVM Oil Associates, said in a research note on Thursday.

"Even if prices drop back below $100/bbl due to abating tension in Eastern Europe, the retracement might prove short-lived and product tightness could keep oil prices at elevated levels in months to come," he added.

Matthew Smith, lead oil analyst for the Americas at Kpler, said there may not be an immediate disruption to supply despite Russia's attack.

Europe and Russia are very interconnected when it comes to energy, and each side is reliant on the other, he told CNBC's "Capital Connection" on Thursday. The U.S. and the West will probably not impose sanctions specifically on energy flows, he added.

"We're not likely to see the supply side of things interrupted, even though everything else is escalating," he said.

In addition to tight supplies, there's also uncertainty about sanctions from President Joe Biden's administration, said Ellen Wald, president of Transversal Consulting.

"Will they sanction Russian oil or gas? Because this would mean significant pain for even U.S. consumers. The United States does import Russian oil. In fact, there's oil headed to the U.S. as we speak," Wald told "Street Signs Asia."

"Now that we've actually got this military operation happening on the ground, you have the prospect of physical inability to shift oil out of certain areas, particularly the Black Sea. So, I think we're now seeing that factoring into prices as well," she said Thursday.

On escalations in Ukraine, Goldman Sachs said in a Wednesday report that the impact on energy prices should be limited.

"While Europe imports a large share of its natural gas consumption from Russia, the US is a net exporter of natural gas and any spillover effects on US gas prices should be modest," analysts at the Wall Street bank said.

"Our commodities strategists also expect only a modest impact on oil prices, though they see the risks as skewed to the upside because the oil market is already tight."

- CNBC's Pippa Stevens contributed reporting.

Correction: This story has been updated to accurately reflect that Ellen Wald said the military operation on the ground is factoring into the spike in oil prices.