After hitting their highest level in seven years, oil prices were steady Monday in seesaw trading. This was despite fears that Russia’s invasion of Ukraine could result in sanctions from the United States and Europe that would affect exports of one of the top producers in the world.
Brent crude oil was at $94.33 per barrel, down 0.1% by 0910 GMT. It had previously reached a peak of $96.16, which was the highest level since October 2014.
U.S. West Texas Intermediate crude oil (WTI), rose 0.1% to $93.11 per barrel. This was a close session high of $94.94, which is the highest since September 2014.
Giovanni Staunovo (UBS commodity analyst) stated that market participants are worried about a conflict between Russia and Ukraine.
He said that oil markets are sensitive to news about possible supply disruptions because oil inventories are low, and spare capacity at oil producers will fall further.
Global financial markets have been rattled by comments from the United States regarding an imminent attack of Russia on Ukraine.
The United States stated on Sunday that Russia could invade Ukraine at any moment and might provide a surprise pretext to an attack.
Edward Moya, an OANDA analyst, stated in a note that Brent crude will not have trouble rallying above $100 if there is a troop movement.
“Oil prices will continue to be extremely volatile and sensitive for incremental updates regarding Ukraine.”
Tensions are rising as the Organization of the Petroleum Exporting Countries, (OPEC), and its allies (a group known as OPEC+) struggle to boost output despite monthly promises to increase production by 400,000 barrels each day (bpd), until March.
Geopolitical tensions may help to boost the bullish view but this oil supercycle, according to RBC Capital analysts.
Analyst Mike Tran wrote in a note that he saw upside visibility for prices to touch, flirt with or flirt with $115/bbl this summer.
According to the International Energy Agency, the gap between OPEC+ production and its target widened from 900,000. whereas JP Morgan stated that the gap for OPEC was at 1.2million bpd.
“We observe signs of strain throughout the group: seven member countries of OPEC-10 failed to meet quota increases for the month,” JP Morgan analysts stated in a February 11 note.
According to the bank, a supercycle is currently in full swing and oil prices are likely to rise to $125 per barrel due to a widening risk premium for spare capacity.
Investors are also monitoring talks between Iran and the United States to revive the 2015 nuclear agreement.
A spokesperson for Iran’s foreign ministry stated Monday that talks are not dead. This despite a senior Iranian security official saying earlier that talks were becoming more difficult.
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