Oil prices jumped nearly $2 a barrel Monday as Russia's military advance into Ukraine raised fears of economic sanctions against one of the world's major energy producers.

By early afternoon in New York, benchmark U.S. crude for April delivery was up $1.80 to $104.39 a barrel. Brent crude, a benchmark for international varieties of crude, was up $1.97 to $111.04 on the ICE Futures exchange in London.

Oil rose, while gold and stock markets sank in response to developments in Ukraine. Russian troops controlled all Ukrainian border posts on the strategic peninsula of Crimea. European and U.S. officials warned Russia against escalating the crisis.

Russia was the world's second-largest producer of oil in 2012, accounting for 12.6% of global supplies, according to the International Energy Agency. It was also the world's top exporter of natural gas in that year, the IEA said. So, any economic sanctions taken against Moscow would limit world supply and push up prices.

"The lion's share of (Russia's) 5 million barrels per day of oil exports go to Europe, so it is hardly surprising that Brent has risen in response to the conflict, even though the risk of actual delivery outages is small," said analysts at Commerzbank in Frankfurt.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said traders are worried about a threat to the global balance of oil supplies.

"Major military events such as this can easily trigger a hoarding mentality in which additional barrels are contracted or moved into inventory as insurance against a major military confrontation," he wrote in a note to clients.

In other energy futures trading on Nymex:

  • Wholesale gasoline rose 2 cents to $3 per gallon.
  • Heating oil added 5 cents to $3.07 per gallon.
  • Natural gas fell 7 cents to $4.54 per 1,000 cubic feet.