By Stephanie Kelly

NEW YORK (Reuters) - Oil prices surged over 2% on Monday to their highest in more than seven years as Ukraine's president declared a "day of unity" for Feb. 16, a date that some Western media have cited as a possible start of a Russian invasion.

Russia is one of the world's largest oil and gas producers, and fears that it could invade Ukraine have driven the rally in oil closer to $100 per barrel, a level not seen since 2014.

"The market remains hyper-sensitive to the developments over the Russian/Ukraine situation," said John Kilduff, partner at Again Capital in New York. "This is now intensifying to a terrific degree. Right now, it's buy now, ask later."

Brent crude rose $2.04, or 2.2%, to settle at $96.48 a barrel, after touching its highest since September 2014 at $96.78.

U.S. West Texas Intermediate (WTI) crude rose $2.36, or 2.5%, to settle at $95.46 a barrel, after hitting $95.82, the loftiest since September 2014.

Ukrainian President Volodymyr Zelenskiy called on Ukrainians to fly the country's flags from buildings and sing the national anthem in unison on Feb. 16.

Ukrainian officials stressed that Zelenskiy was not predicting an attack on that date, but responding with skepticism to foreign media reports. Several Western media organisations have quoted U.S. and other officials citing the date as when Russian forces would be ready for an attack.

The United States sees no "tangible sign" of de-escalation of Russian forces on the Ukraine border, the U.S. State Department said. It remained unclear whether Russia was interested in pursuing a diplomatic path, the State Department added.

Secretary of State Antony Blinken said the United States was relocating its embassy operations in Ukraine from the capital Kyiv to the western city of Lviv, citing the "dramatic acceleration in the buildup of Russian forces."

Russia has amassed thousands of troops near Ukraine's borders, but Moscow denies it plans to invade and has accused the West of hysteria. The United States warned on Sunday that Russia could invade Ukraine at any time and might create a surprise pretext for an attack. [MKTS/GLOB]

Russia is one of the largest crude oil producers, with a capacity of about 11.2 million barrels per day, said Nishant Bhushan, senior oil market analyst for Rystad Energy.

"Any disruption of oil flows from the region would send Brent and WTI prices skyrocketing higher far above $100, in a market struggling to supply the increased demand for crude as economies recover from the pandemic," Bhushan said.