Oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger US and European sanctions that would disrupt exports from the world’s top producer in an already tight market.
Brent crude futures was at US$95.56 a barrel by 0235 GMT, up US$1.12, or 1.2 per cent, after earlier hitting a peak of US$96.16, the highest since October 2014.
US West Texas Intermediate (WTI) crude rose US$1.28, or 1.4 per cent, to US$94.38 a barrel, hovering near a session-high of US$94.94, the loftiest since September 2014.
“If … troop movement happens, Brent crude won’t have any trouble rallying above the US$100 level,” OANDA analyst Edward Moya said in a note.
“Oil prices will remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation.”
The tensions come as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as Opec+, struggle to ramp up output despite monthly pledges to increase production by 400,000 barrels per day (bpd) until March.
The International Energy Agency said the gap between Opec+ output and its target widened to 900,000 bpd in January, while JP Morgan said the gap for Opec alone was at 1.2 million bpd.
“We note signs of strain across the group: seven members of Opec-10 failed to meet quota increases in the month, with the largest shortfall exhibited by Iraq,” JP Morgan analysts said in a Feb. 11 note.
The bank added that a super-cycle is in full swing with “oil prices likely to overshoot to US$125 a barrel on widening spare capacity risk premium”.
Investors are also watching talks between the US and Iran to revive the 2015 nuclear deal.