Oil jumps to highest since 2014 as geopolitical tension in Ukraine kicks off cliffhanger week
- West Texas Intermediate (WTI) rallied more than 1 per cent to hit the highest since 2014
- Physical barrels priced off a key global benchmark hit unprecedented levels, and the spread between Brent’s two nearest futures contracts neared US$2 a barrel
Oil extended a powerful rally as geopolitical tensions over Ukraine ticked higher at a time of soaring global demand, with physical indicators pointing to growing near-term scarcity.
West Texas Intermediate (WTI) rallied more than 1 per cent to hit the highest since 2014, building on eight weekly gains. In signs of market tightness, physical barrels priced off a key global benchmark hit unprecedented levels, and the spread between Brent’s two nearest futures contracts neared US$2 a barrel.
Crude has surged as the crisis in Europe reinforced a rally that’s been underpinned by soaring worldwide demand, supply interruptions and declining stockpiles. Its run of weekly gains was the longest since October, before the emergence of the omicron virus variant. An invasion of Ukraine, coupled with retaliatory US-led sanctions, risks upending global energy flows.
“US$100 oil is in sight,” said Howie Lee, an economist at Oversea Chinese Banking, warning a full-blown conflict between Russia and Ukraine may send crude well above that. “Supply constraints have been the main driver for oil prices going to US$100, even with demand staying at current levels.”
US National Security Advisor Jake Sullivan told CNN on Sunday that there’s “a distinct possibility” of major military action very soon. The same day, Biden spoke with Ukrainian President Volodymyr Zelensky, telling him that the US and others would act “swiftly and decisively” in the face of any aggression.