The price of West Texas Intermediate (WTI) crude oil is trading at $95 U.S. a barrel as tensions between the Ukraine and Russia intensify.
The global benchmark oil price has risen 1.3%, touching $95 U.S. a barrel before falling back. U.S. National Security Advisor Jake Sullivan said over the weekend that the U.S. believes Russia could take offensive military action or attempt to invade Ukraine as early as this week.
A potential Russian invasion of Ukraine could not only disrupt crude oil supplies but also could spark retaliatory sanctions by the U.S. Oil prices have soared in recent weeks on speculation that demand will outpace supply as the global economy rebounds from the pandemic.
The Organization of the Petroleum Exporting Countries (OPEC) said last week that the rebound in oil consumption could surpass its forecasts this year as economic activity improves and travel gathers pace.
The OPEC coalition’s “chronic” struggle to revive output is also likely to support prices, unless the group’s Middle Eastern heavyweights pump more, according to the International Energy Agency (IEA).
Yet oil’s rally is still facing some headwinds, as officials from the U.S. to Europe have indicated that sides are closing in on a nuclear pact after talks resumed in Vienna on Tuesday.
Bank of America (BAC) said its expectation that crude oil will hit $120 U.S. a barrel by the middle of the year is now at risk as the Iranian nuclear negotiations proceed. The deal could tip markets into a surplus of as much as one million barrels a day in the second half, pushing prices down by $10 U.S. to $15 U.S. a barrel.
West Texas Intermediate (WTI) for March rose $3.22 U.S. to settle at $93.10 a barrel U.S., while Brent crude oil for April settlement gained $3.03 U.S. to settle at $94.44 U.S. a barrel.
Rising energy prices are causing concern for governments worldwide. White House Economic Adviser Jared Bernstein said over the weekend that releasing more crude reserves to tackle surging gasoline prices was an option for the administration of U.S. President Joe Biden.