The market is worried that the Ukrainian crisis will further tighten global oil supplies, while OPEC has not been able to meet production targets.
The Ukrainian crisis is increasingly becoming the talk of traders and investors. Crude oil prices (Crude Oil) last week soared more than 1 percent to a record high in more than seven years, as the market fears the Ukraine crisis will further tighten global oil supplies. At the time of writing (14/February), WTI and Brent were at USD94.70 and USD96.10 per barrel, respectively.
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| WTI Crude Oil Price Chart (Daily) |
Top US officials said over the weekend that Russia could invade Ukraine at any time and might "create an excuse" to justify the attack. Britain agrees with the US assessment and is planning to send economic and military aid to Ukraine as soon as possible.
Russia denies any plans to invade Ukraine and accuses the West of being "hysterical". However, the leaders of NATO member countries seem to believe in the potential for such an invasion.
German Chancellor Olaf Scholz warned of the threat of sanctions if Moscow did invade Ukraine. He will visit Kyiv today, then discuss with President Vladimir Putin in Moscow on Tuesday to discuss de-escalation of the situation.
Traders in the commodity markets mainly focus on two potential developments in this situation. First, if the West agrees to impose sanctions on Russia. Second, if Russia really invaded Ukraine. Both of them can further reduce the world's oil supply.
"If ... a troop movement occurs, Brent crude prices will have no trouble climbing above the USD100 level," said Edward Moya, analyst at broker OANDA, as quoted by Reuters. "Oil prices will remain very volatile and sensitive to news. new on the Ukrainian situation."
The current high price of oil is mainly due to the difficulty of OPEC+ countries increasing their production amid various armed conflicts and restrictions related to the pandemic. The International Energy Agency (IEA) said that the gap between OPEC+ output and its production target had widened to 900 thousand barrels per day (bpd) in January, while JP Morgan estimates the gap for OPEC alone (without Russia et al -red) to have reached 1.2 million bpd. .
There was a glimmer of hope for the fulfillment of OPEC's production targets in connection with the US-Iran peace talks last week. However, an Iranian security official said today that progress in the discussions was "getting more difficult".
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