NEW YORK: Brent oil on Wednesday surpassed $90 per barrel to strike the highest level for more than seven years, rattled by geopolitical tensions in Ukraine and supply concerns in the Middle East raising concerns about further disruption in an already-tight market.
European benchmark Brent crude rose $2.02, or 2.3%, to $90.22, the first time the global benchmark has broken $90 since October 2014. US West Texas Intermediate (WTI) crude was up $2.09, or 2.4%, to $87.69.
US President Joe Biden said on Tuesday he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine. On Monday, Yemen’s Houthi movement launched a missile attack on a United Arab Emirates base.
The tensions have only added to worries about the various factors contributing to an already tight market. OPEC is having trouble meeting monthly production targets as it restores supply to markets after drastic cuts in 2020, and the United States is more than a million barrels short of its record level of daily output.
At the same time, demand remains strong, suggesting that inventories may continue to decline. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meets on February 2 to consider another output increase.
Inventories in the United States rose in the most recent week, with crude stocks up by 2.4 million barrels, against expectations for a modest decline in stocks. Gasoline inventories rose to their highest levels in almost a year – a needed salve for the market.
US refined product supplied – a measure of demand – surged again, putting the four-week moving average at 21.2 million barrels per day, ahead of pre-pandemic trends. The increases have been led by consumption of distillates like diesel, as gasoline use has fallen off modestly in recent weeks.
Investors across the markets are awaiting the coming policy update from the US Federal Reserve which is expected to signal plans to raise interest rates in March as it focuses on fighting inflation
