The price of oil jumped on Thursday as Brent exceeding $100 a barrel the very first time since the beginning of 2014 following the fact that Russia launched an attack on Ukraine and sparked fears that war in Europe could affect the global supply of energy.
Following Russian president Vladimir Putin authorised what he called a “special military operation in Ukraine, the foreign minister Dmytro Kuleba said in a tweet that Russia had launched an all-out attack on Ukraine and was targeting cities with military strikes.
Ukraine has stated that Russia is moving military equipment into Ukraine from Crimea and was facing continuous cyber-attacks. There has been one death reported to date.
Russia is the second-largest oil producer, mostly exporting its oil to European refineries. It is also the biggest supplier of gas natural to Europe with around 35% of its gas supply.
Brent crude climbed to $103.78 one barrel, which is the highest price since the 14th of August, 2014 and was $103.18 one barrel at 0830 GMT which was up $6.34 which is 6.5 percent.
US West Texas Intermediate (WTI) crude futures surged $5.48 (or 6%) in the last 24 hours, reaching $97.58 per barrel, following increasing to $98.46 which was the highest level since the 11th of August. 11 in 2014.
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The price of oil has risen over $20 per barrel since 2022 due to worries that United States and Europe would put sanctions on Russia’s energy sector, causing disruption to supply.
To underscore the supply worries The premium of the front-month Brent against the 2nd-month Brent was up to $0.75 to $3.54 per barrel, the highest since 2011.
“This increased uncertainty in an environment where the market for oil is already tight leaves it open to risk, which means prices will likely remain volatile and high,” said Warren Patterson the director of the commodity research department at ING.
Although there aren’t any sanctions on the energy market the western countries and Japan on Tuesday hit Russia by imposing new sanctions on it for sending troops into separatist regions in the eastern region of Ukraine and threatened to take the punishment further in the event that Moscow began to invade its neighbor.
“It is not only geopolitical risks that are an issue but the ongoing tension on the supply of” OCBC economist Howie Lee said.
“Russian oil supplies will vanish in a matter of hours if it is subject to restrictions… as well OPEC isn’t able to produce enough to fill the gap.”
A few participants of the Organisation of the Petroleum Exporting Countries (OPEC) declared this week that there was no reason for the organization and its allies to boost production further, as a possible agreement in the coming days between Iran as well as world power on the nuclear power of the oil producers’ program would boost supplies.
The US as well as Iran have been involved in indirect talks on nuclear issues in Vienna which could result in the lifting of sanctions against Iranian selling oil.
However, some OPEC members are struggling to meet their current output goals.
Experts have also warned about rising inflationary pressures on the world economy due to the $100 oil price particularly for Asia that imports the bulk of its energy requirements.
“Soaring oil prices are coming at an the worst time of the year,” HSBC economist Frederic Neumann declared.
