By Adedapo Adesanya
Brent crude climbed to its highest mark of $96 per barrel in more than seven years as fears grew that Russia could attack Ukraine in the near future.
The price rose by 1.74 per cent or $1.64 to $96.08 while the United States West Texas Intermediate (WTI) crude rose by 2.12 per cent or $1.97 to trade at $93.10 per barrel.
Russia is one of the world’s largest oil-and-gas producers and fears that it could invade Ukraine have driven the rally in oil closer to the $100-per-barrel mark.
The Eastern European giant has amassed thousands of troops near Ukraine’s borders, but the country continues to deny its plans to invade and has accused the West, particularly the United States, of overreaction.
The United States revealed that there was no tangible sign of de-escalation of Russian forces on the Ukraine border. It remained unclear whether Russia was interested in pursuing a diplomatic path.
On his part, Ukrainian Ambassador, Mr Vadym Prystaiko, said Ukraine was prepared to make some concessions to Russia.
The market expects that the disruption of oil flows from the region would send Brent and WTI prices skyrocketing higher far above $100.
This is happening as supply continues to struggle as demand increases at a time when economies are recovering from the coronavirus pandemic.
Global COVID-19 concerns are waning and countries are removing or relaxing restrictions, causing a surge in demand for oil that the current supply would struggle to meet.
In addition, geopolitical uncertainty in major exporting countries is worsening, threatening to disrupt trade flows amid already limited availability.
Supplies have been stretched as the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, have struggled to deliver monthly pledges to increase output by 400,000 barrels per day until March.
Due to this, the International Energy Agency (IEA) urged the alliance to close the gap between words and its actions. It said that the gap has widened between the OPEC+ target and actual output.
Investors are also watching the indirect talks between the United States and Iran. The Iranian foreign minister said Iran was in a hurry to reach a swift agreement in nuclear talks in Vienna, provided its national interests are protected.
Modupe Gbadeyanka