Oil and gas prices are rising on concerns that the Ukraine-Russia crisis may disrupt global supplies.
On Tuesday, the price of Brent crude oil, an international benchmark, reached a seven-year high of $99.38 (£73) a barrel.
After reaching a record 149.12p a litre on Sunday, the RAC warned that the crisis will push up UK petrol prices even more.
Russia dispatched soldiers to two rebel-held territories in Ukraine’s east after declaring them independent nations.
In London, the FTSE 100 fell more than 1.4 percent before rebounding ground and turning positive. However, Asian stock exchanges ended down, and US stock exchanges were ready for losses.
Sanctions have been applied or threatened on Russia, the world’s second largest oil exporter behind Saudi Arabia. Russia is also the world’s leading natural gas producer.
On Tuesday, German Chancellor Olaf Scholz took a critical step by halting the approval of the Nord Stream 2 pipeline, which would have sent gas straight from Russia to Germany.
In response, wholesale gas prices increased, with the UK price for April delivery increasing by 9% and the cost for May increasing by 10% to 191p per therm.
However, this is still far lower than the December highs of last year, when it peaked at more than 400p per therm.
Sanctions requiring Russia to deliver less petroleum or natural gas would have “substantial implications” for oil prices and the global economy, according to Manulife Investment Management’s Sue Trinh.
Oil prices, which have been climbing for months, have risen by more than 10% since the beginning of February.
According to Maike Currie, an investment director at Fidelity International, oil might rise beyond $100 per barrel as a result of the Ukraine situation, a harsh winter in the United States, and a lack of investment in global oil and gas supply.
The majority of the oil and gas that the UK purchases does not originate from Russia, but if Russian supplies are limited, wholesale prices would undoubtedly rise globally.
Despite the tensions, average UK petrol prices at the pump reached a new high of 149.12p per litre on Sunday, before falling back to 149.03p on Monday, according to the RAC. Average diesel prices touched 152.51p per litre on Monday, slightly below Sunday’s record of 152.58p.