Oil spikes to new 7-year highs due to supply worries to $91.25 per barrel

Petroleum prices hit seven-year highs Friday, as supply worries continue to rise due to geopolitical tensions.

Brent crude oil futures rose $1.91 or 2.1% to $91.25 per barrel by 1436 GMT. They had reached $91.41 Friday, their highest level since October 2014.

U.S. West Texas Intermediate crude futures increased $1.83 or 2.11% to $88.44 per barrel WTI also hit a new seven-year high of $88.76 in Friday’s session.

Brent and WTI are both on track to achieve their six-weekly gains in what would be the longest weekly gain streak since October.

The Brent market structure has seen a steep decline in supply, with Brent’s six-month backwardation at $6.62 per barrel. This is the largest since 2013. This means that Brent’s current levels are much higher than those of the later months. This encourages traders to quickly sell oil out of storage.

Concerns that the Ukraine crisis might disrupt energy markets continue to support oil prices. U.S. President Joe Biden, and Ursula von der Leyen, his European Union counterpart, pledged Friday to work together on ensuring Europe’s energy security. This was in the midst of Russia’s deployment of troops at Ukraine’s borders.

Carsten Fritsch, Commerzbank commodities analyst, stated that the risk premium for oil prices is now likely to reach almost $10/bbl.

The February 2nd meeting of the Organization of the Petroleum Exporting Countries, (OPEC), and its allies led Russia is the focus of the market. They are collectively called OPEC+.

According to OPEC+ sources, the OPEC+ producer group will likely stick with a March increase in oil production target, according to Reuters.

Analysts and officials from oil companies said that China could see a 7% increase in crude oil imports this year.

Swedish bank SEB increased its Brent crude forecast to $85 per barrel on Friday for the first quarter and second quarters this year by $10 and $5, respectively

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