Singapore, February 14 (BNA): Oil prices hit their highest levels in more than seven years on Monday amid concerns that a possible invasion of Ukraine by Russia could lead to US and European sanctions that would disrupt exports from the world’s largest producer. market.
Brent crude futures were at $95.61 a barrel by 05:06 GMT, up $1.17, or 1.2%, after earlier hitting a peak of $96.16, the highest since October 2014. US West Texas Intermediate crude rose $1.41, or 1.5 %. to $94.51 a barrel, close to a session high of $94.94, and the highest since September 2014.
Comments from the United States about an imminent attack by Russia on Ukraine have shaken global financial markets.
The United States said on Sunday that Russia could invade Ukraine at any time and could create a sudden pretext for an attack.
“If the movement of forces occurs, then Brent crude will have no problem rising above the $100 level,” Edward Moya, an analyst at Oanda, said in a note.
“Oil prices will remain very volatile and sensitive to increased updates regarding the situation in Ukraine.”
The tensions come as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, struggle to raise production despite monthly pledges to raise output by 400,000 barrels per day until March.
The International Energy Agency said the gap between OPEC+ production and its target widened to 900,000 barrels per day in January, while JPMorgan said the gap for OPEC alone was 1.2 million barrels per day, Reuters reported.
“We are noticing signs of tension across the group: seven members of OPEC-10 failed to meet quota increases for the month with the largest deficits shown by Iraq,” JPMorgan analysts said in a note on Feb. 11.
The bank added that the super-cycle is in full swing with “oil prices likely to exceed $125 per barrel as the excess capacity risk premium increases.”
Excess supplies are limited and demand for oil has outpaced production growth, said CMC Markets analyst Tina Teng, as economies bounced back from the worst of the coronavirus pandemic.
“It won’t take long for prices to go higher, although world leaders are rushing to help defuse the rising tension,” she added.
Investors are also watching talks between the United States and Iran to revive the 2015 nuclear deal.
But a senior Iranian security official said on Monday that progress in the talks had become “more difficult”.
Energy services company Baker Hughes said on Friday that strong oil prices in the United States are encouraging energy companies to increase production as it added the largest number of drilling rigs in four years last week.
HF