Oil rose to seven-year highs above $90 per barrel on Thursday, as the Ukraine conflict trumped hints that the United States Federal Reserve could tighten monetary policy.
Brent oil futures were up 89 cents, or 1%, at $90.85 a barrel as of 12:17 GMT. West Texas Intermediate (WTI) crude futures in the United States were up 87 cents, or 1%, at $88.22.
Crude prices rose on Wednesday, with Brent surpassing $90 a barrel for the first time in seven years as tensions between Russia and the West grew. Russia, the world’s second-largest oil producer, and the West have been at odds over Ukraine, fueling worries of an interruption in European energy supply.
US President Joe Biden warned on Tuesday that if Russia invades Ukraine, he will consider imposing personal penalties on President Vladimir Putin. Yemen’s Houthi movement conducted a missile strike on a United Arab Emirates facility on Monday.
“Anxiety about potential supply disruptions in the Middle East and Russia is providing bullish fodder for the oil market,” said PVM oil dealer Stephen Brennock.
“The market’s downside is limited due to heightened tensions between Russia and Ukraine, as well as the threat to infrastructure in the UAE,” said Nissan Securities’ general manager of research, Hiroyuki Kikukawa.
According to market sources, the weekly U.S. inventory data from the American Petroleum Institute on Tuesday showed crude stockpiles declined by 8,72,000 barrels, highlighting a tight supply and demand balance.
Another significant event is that the Organization of Petroleum Exporting Countries and Allies, known as OPEC+, will meet on February 2 to discuss another rise in output.
OPEC+ has been progressively unraveling 2020’s record output curbs, lifting its monthly objective by 400,000 barrels per day, though real supply growth has fallen short of that as several members struggle to increase output.
OPEC+ is likely to stick to its planned increase in output target for March, according to various OPEC+ sources, as the group sees demand improving despite negative risks from the pandemic and imminent interest rate hikes.
Nonetheless, a surge in crude oil and gasoline stocks in the United States relieved some of the supply issues.
The Energy Information Administration (EIA) reported on Wednesday that crude stocks increased by 2.4 million barrels last week. In a Reuters survey of analysts, experts predicted a fall of 728,000 barrels.
Stockpiles of gasoline increased by 1.3 million barrels, the largest since February 2021.