Soaring oil prices, supply problems approaching best month since February 2021

Oil jumped more than 1% on Monday, to a near seven-year high reached in the previous session, as supply problems and political tensions in Eastern Europe and the Middle East sent oil prices posting monthly gains the largest in almost a year. Brent crude oil rose $1.07, or 1.2%, to $91.10 a barrel at 0325 GMT, after adding 69 cents on Friday. The first contract for March delivery expires later today.

The most active Brent contract, for April delivery, was trading at $89.51, up 99 cents or 1.1%. US West Texas Intermediate crude added $1.07, or 1.2%, to $87.89 a barrel, after rising 21 cents on Friday. Benchmarks on Friday posted their highest levels since October 2014, $91.70 and $88.84, respectively, and their sixth consecutive weekly gain. They are on track for a gain of about 17% this month, the highest since February 2021 An analyst at Fujitomi Securities Co Ltd.

“Waiting for OPEC+ to maintain its existing policy of gradually increasing production, oil prices are likely to continue their uptrend this week,” he said, predicting Brent would remain above $90 and WTI will head towards $90. Major producers in the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, known collectively as OPEC+, have raised their output target each month since August by 400,000 bpd as they cut their record output made in 2020. 4,444 But they fell short of their production target as some members struggled with capacity constraints. Oil prices are showing signs of overheating as traders anticipate severe oil shortages this year, columnist of the reputed website John Kemp said, noting that inventories are already low and There is very little global spare capacity to increase production in the short term.

At its February 2 meeting, OPEC+ is expected to further increase its projected oil production target for March. According to ANZ Research, given the market deficit and low inventories, “constraints” supply constraints will likely create a substantial risk premium” as tourism resumes. “Traffic in Europe rebounds as Omicron case count declines. US gasoline demand just hit 2019 low, which is better-than-expected result in November,” he said in a note. Tensions between Russia and the West have also supported crude oil prices. Russia, the world’s second-largest oil producer, and the West are at odds with Ukraine, raising fears that Europe’s energy supplies could be disrupted.

The head of NATO on Sunday said Europe needed to diversify its energy supplies, with Britain warning that there was a “high probability” that Russia would seek to invade Ukraine. Markets are also on high alert about the situation in the Middle East after the United Arab Emirates said it intercepted a ballistic missile fired by the Houth is from Yemen as the Gulf nation hosted Israeli President Isaac Herzog on a first visit of its kind. Meanwhile, more than 1,400 US flights were canceled on Sunday after the northeastern US states were hit a day earlier by a deadly winter storm that prompted several states to declare status urgent.