By Peter Nurse

Investing.com -- Oil prices soared Monday, climbing to levels not seen since 2008, as the U.S. and its Western allies discussed the banning of Russia crude imports, further tightening the global market.

By 5 AM ET (1000 GMT), U.S. crude futures traded 6.2% higher at $122.91 a barrel, while the Brent contract rose 5.9% to $124.95.

U.S. Gasoline RBOB Futures were up 4.3% at $3.6987 a gallon.

U.S. gasoline prices at the pump jumped 11% over the past week to the highest since late July 2008

The crude market received an additional boost Monday after U.S. Secretary of State Antony Blinken said the United States and European allies are exploring banning imports of Russian oil in response to Moscow’s invasion of Ukraine.

U.S. House of Representatives Speaker Nancy Pelosi added, in a letter published Sunday, that the chamber is "exploring" legislation to do so, as well potentially authorizing $10 billion in aid for Ukraine.

“The market was already factoring in supply tightness due to voluntary import curbs by some buyers and logistical issues around the Black Sea,” said analysts at ING, in a note. “However, any official restrictions on Russian crude could make it further challenging to balance the oil market, given that Russia is one of the major crude oil suppliers to Europe and Asia.”

Oil prices have soared over the past week, posting their strongest weekly gain since the middle of 2020, after the United States and its allies levied sanctions on Russia, making it more difficult for western companies to do business with the country after its invasion of Ukraine.

Data from ICE Futures Europe Prices showed that at least 200 contracts for the option to buy May Brent futures at $200 a barrel traded on Monday, while data released Friday indicated net longs in ICE Brent increased by 18,047 lots last week and net longs in NYMEX WTI climbed by around 8,430 lots. This all suggests traders are positioning for prices to climb even higher.

A potential caveat to prices heading higher, with J.P. Morgan last week stating that Brent crude could end the year at $185 a barrel, is the possibility of Iranian oil exports returning to the global market,

Iran and the U.S. are seen as being close to reviving a 2015 nuclear deal, which could see Washington waiving sanctions on purchases of Iranian oil.

Iran used to be OPEC’s second largest producer and an agreement could see the Persian Gulf country restoring around 1 million barrels of daily crude production.

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Crude Oil Soars; Western Powers Discuss Banning Russian Oil Imports