Brent Soars to $90 as Market Maintains Bullish Trend

By Adedapo Adesanya

The Brent crude went up by 69 cents or 0.77 per cent on Friday to a seven-year peak of $90.03 per barrel while the United States West Texas Intermediate (WTI) crude oil futures pointed north with a 21 cents or 0.24 per cent to $86.82 per barrel.

The commodity rose as a result of the uptick recorded its sixth straight weekly gain, which was majorly spurred by a week filled with geopolitical turmoils due to heavy concerns over tight energy supply.

Prices drew support from concerns over a possible military conflict in Ukraine that could disrupt energy markets, especially natural gas supply to Europe.

Russia is the world’s third-largest oil producer and second-largest supplier of natural gas.

The country has massed around 100,000 troops on Ukraine’s border as it demands that North Atlantic Treaty Organisation (NATO) never admit Ukraine and other ex-Soviet nations as members and that the alliance roll back troop deployments in other former Soviet bloc nations.

These demands have stoked tension between the country and the US and its allies, which deemed them non-starters.

The tensions over Ukraine contributes to some uncertainty around a decision on crude production from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) next week.

At its February 2 meeting, OPEC+ is likely to stick with a planned rise in its oil output target for March.

This is because some key producers in the OPEC+ group, including Nigeria, continue to struggle to meet their output quotas.

Early in the week, the market also positively reacted to attacks on the United Arab Emirates (UAE) by Yemen’s Houthi group, which stoked tension in the Middle East.

Talks on the revival of the Iranian nuclear deal, if the negotiations continue at their current pace, show an agreement could be reached by the end of February, though it might take another two months to have it finalized.

This might lead to the lifting of sanctions on Iran and more barrels of Iranian oil for world markets.

Meanwhile, the market is also facing concerns that the US Federal Reserve might be even more aggressive in raising interest rates in the world’s largest oil producer.