Oil prices hit their highest level since 2014 on Monday amid concerns that Russian supplies to Europe could be interrupted due to sanctions if tensions with Ukraine escalate.
Brent crude futures were at $95.67 a barrel by 7:30am GMT, up 1.3%, after hitting the highest level since October 2014 at $96.16 earlier in the day. US West Texas Intermediate (WTI) crude rose 1.4% to $94.39 a barrel, with a session-high of $94.94, also the highest in over seven years.
Both benchmarks reacted to last week’s claims from Washington about an imminent attack by Russia on Ukraine, which it predicted would take place later this week. According to Sunday’s statements from President Joe Biden’s National Security Advisor Jake Sullivan to CNN, Russia could invade Ukraine “any day now.” Such escalation could immediately push oil prices above the $100 threshold, experts say.
“If... troop movement happens, Brent crude won’t have any trouble rallying above the $100 level. Oil prices will remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation,” OANDA analyst Edward Moya said in a note to Reuters.
Oil prices are also rising amid difficulties in trying to push up output faced by the Organization of the Petroleum Exporting Countries (OPEC) and its allies. Last year, the group decided to gradually increase oil production by 400,000 barrels per day until March, but many OPEC producers are failing to pump more crude, each due to their own technological or political problems. The International Energy Agency said oil output by OPEC and its allies in January was 900,000 bpd less than its target, while JP Morgan estimated it was 1.2 million bpd lower for OPEC alone.
“Seven members of OPEC-10 failed to meet quota increases in the month, with the largest shortfall exhibited by Iraq,” JP Morgan analysts said in a note on February 11, predicting that oil prices are “likely to overshoot to $125 a barrel on widening spare capacity risk premium.”
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