LONDON: Brent crude prices hit their highest level in more than seven years on Tuesday on growing demand optimism, easing concerns about the Omicron COVID-19 variant and geopolitical tensions.
Brent crude futures were up 44 cents, or 0.5%, at $86.92 a barrel at 0230 GMT, after earlier hitting a high of $87.00, their highest since October 30, 2014.
US West Texas Intermediate (WTI) crude futures jumped 81 cents, or 1%, from Friday’s settlement to $84.62 a barrel, just off a more than two-month high of $84.78 hit earlier. Trade on Monday was subdued as it was a US public holiday.
There were also worries about possible supply disruptions after Yemen’s Houthi group attacked the United Arab Emirates, escalating hostilities between the Iran-aligned group and a Saudi Arabian-led coalition.
After launching drone and missile strikes which set off explosions in fuel trucks and killed three people, the Houthi movement warned it could target more facilities, while the UAE said it reserved the right to “respond to these terrorist attacks”.
UAE oil firm ADNOC said it had activated business continuity plans to ensure uninterrupted supply of products to its local and international customers after an incident at its Mussafah fuel depot. read more
CommSec analysts said oil prices were being supported by colder winter temperatures in the northern hemisphere which were driving up demand for heating fuels.
Analysts said the tight supply-demand balance is unlikely to ease, as some producers within the Organization of the Petroleum Exporting Countries are struggling to pump at their allowed capacities, due to underinvestment and outages, under an agreement with Russia and allies to add 400,000 barrels per day each month.
Brent and West Texas Intermediate have climbed more than 10 per cent so far this year as investors become increasingly confident that the demand will increase as the world slowly returns to normal and economies reopen.
