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- Oil prices continue to surge in 2022, climbing to a seven-year high on Monday as geopolitical tensions between Russia and the West over Ukraine continue to boil
- Brent crude futures were up 1.2 per cent to over US$95.60 (A$134.30) per barrel on Monday morning, with WTI up 1.5 per cent to over US$94.50 (A$132.75) per barrel
- It seems the latest surge in oil prices comes from United States’ comments on Sunday about a possible “surprise” military attack by Russia against Ukraine
- Russia has allegedly amassed over 100,000 troops near Ukraine, and US National Security Advisor Jake Sullivan on the weekend said an invasion could begin “any day now”
- Meanwhile, OPEC+ members have struggled to ramp up oil output to desired levels, with several member countries missing quota increases over the past month
Oil prices continue to surge in 2022, climbing to a seven-year high on Monday as geopolitical tensions between Russia and the West over Ukraine continue to boil.
With the possibility of a Russian invasion of Ukraine still high, oil prices continue to preempt major supply disruptions, with Brent crude futures up 1.2 per cent to over US$95.60 (A$134.30) per barrel this morning and West Texas Intermediate (WTI) up 1.5 per cent to over US$94.50 (A$132.75) per barrel.
This marks the highest price of crude oil since September 2014.
It seems the latest surge in oil prices, which have had little respite over recent months, comes from United States comments on Sunday about a possible “surprise” military attack by Russia against Ukraine.
Russia has allegedly amassed over 100,000 troops near Ukraine, and President Joe Biden’s National Security Advisor Jake Sullivan on the weekend said an invasion could begin “any day now”.
The White House said a Russian invasion of Ukraine might create a surprise pretext for an attack, though Russia continues to deny any such plans.
Still, the threat of an invasion is enough in and of itself to spook financial markets.
OANDA analyst Edward Moya said Brent crude would have no trouble rallying US$100 (A$140) per barrel if troop movement happened.
“Oil prices will remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation,” Mr Edward said in a note seen by Reuters.
The tensions have seen the Organisation of the Petroleum Exporting Countries and its allies, together known as OPEC+, move to ramp up output in an effort to bring prices down, but even this has been a struggle.
JP Morgan said the gap between the output of OPEC members and their production target has hit 1.2 million barrels, with several member countries failing to meet quota increases over the past month.
With supply struggles compounding geopolitical tension, JP Morgan said oil prices were likely to overshoot US$125 (A$175.60) per barrel.
US oil producers added the most oil rigs to operations around the country in over four years last week as they do their best to ramp up output.
The energy sector concerns have seen investors turn their eyes to talks between the United States and Iran to revive a 2015 nuclear deal.
