Oil prices jumped more than $6 on Monday, with Brent crude climbing above $114 a barrel, as European Union nations considered joining the US in a Russian oil embargo and after a weekend attack on Saudi oil facilities.

Brent crude futures were up $6.80, or 6.3 per cent, at $114.73 a barrel by 15:30GMT adding to a 1.2 per cent rise last Friday.

Prices moved higher ahead of talks this week between European Union governments and the US President Joe Biden in a series of summits that aim to harden the West’s response to Moscow over its invasion of Ukraine.

EU governments will consider whether to impose an oil embargo on Russia.

Early on Monday Ukraine’s deputy prime minister, Iryna Vershchuk, said there was no chance the country's forces would surrender in the besieged eastern port city of Mariupol.

With little sign of the conflict easing, the focus returned to whether the market would be able to replace Russian barrels hit by sanctions.

“A Houthi attack on a Saudi energy terminal, warnings of a structural shortfall in production from Opec and a potential European Union oil embargo on Russia have seen oil prices jump in Asia,” OANDA senior analyst Jeffrey Halley said .”Even if the war ends tomorrow, the world will face a structural energy deficit thanks to Russian sanctions."

Over the weekend, attacks by Yemen's Iran-aligned Houthi group caused a temporary drop in output at a Saudi Aramco refinery joint venture in Yanbu, feeding concern in a jittery oil products market, where Russia is a key supplier and global inventories are at multi-year lows.

The latest report from Opec and allies including Russia, together known as Opec+, showed some producers are still falling short of their agreed supply quotas.

The International Energy Agency said this week the oil market was set for a 700,000 bpd supply deficit in the second quarter.

Sensex dips

Reversing its early gains, benchmark BSE Sensex plunged by 571 points or nearly 1 per cent at close on Monday following losses in banking, oil, FMCG and IT stocks as surging oil prices played spoilsport amid prolonged Russia-Ukraine war.

The 30-share Sensex opened higher and rose over 260 points to touch the day's high of 58127.95. The barometer settled at 57292.49, down by 571.44 points or 0.99 per cent.

The broader NSE Nifty declined 169.45 points or 0.98 per cent to finish at 17117.60 after rallying over 620 points in the past two sessions. It touched a high of 17353.35 points and a low of 17096.40 in the day trade.

Rupee falls

The rupee slumped 34 paise to close at 76.18 against the dollar on Monday as rising crude prices and a lacklustre trend in domestic equities weighed on investor sentiment.

Expectations of aggressive rate hikes by the US Federal Reserve to control inflation also weighed on the local unit.

At the interbank foreign exchange market, the rupee opened lower at 76.08 against the American currency, later lost further ground to settle at 76.18, down 34 paise.

On Thursday, the rupee spurted by 37 paise to close at 75.84 against the dollar.

“The dollar is in rally mode as markets expect an even more hawkish Federal Reserve moving forward. Weakness in domestic equities and higher crude oil prices also weighed on the local unit,” said Dilip Parmar, research analyst, HDFC Securities.