By Adedapo Adesanya
Oil prices soared on Thursday as fears of a Russia-Ukraine conflict that could disrupt energy supply to Europe, resulting in the Brent crude rising by 38 cents or 0.43 per cent to $89.70 per barrel.
Also, the price of the United States West Texas Intermediate (WTI) crude appreciated during the session by 46 cents or 0.50 per cent to sell at $87.04 per barrel.
The tension between Russia and the West over Ukraine lent the heaviest support as the standoff continues to fester, maintaining a fear premium in the oil complex over a potential disruption of Russian oil and gas supply to Europe, though concerns are focused on gas supplies more than crude.
Prices had surged on Wednesday, with Brent climbing above $90 a barrel for the first time in seven years amid tensions between Russia and the West.
Threats to the United Arab Emirates from Yemen’s Houthi movement had added to oil market jitters.
As the UAE situation slowed, the situation in Europe continue to intensify as Russia said it was clear the United States was not willing to address its main security concerns in their standoff over Ukraine but kept the door open for dialogue.
Fears of a military action outweighed the rising US Dollar on Thursday, which typically leads to declining oil prices as crude becomes more expensive for holders of other currencies.
Yesterday, the Dollar index climbed to the highest since July 2021.
The American currency strengthened after the US Federal Reserve signalled in its Federal Open Market Committee (FOMC) statement on Wednesday that a rate hike was coming in March, while Fed Chairman, Mr Jerome Powell, said there were upside risks to inflation.
Also, the market is starting to turn its attention to a February 2 meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, OPEC+.
OPEC+ is likely to stick with a planned rise in its oil output target for March. It has raised its output target each month since August by 400,000 barrels per day as it unwinds record production cuts made in 2020.
In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000 barrels per day target for yet another month.
Modupe Gbadeyanka