Oil Prices Increase on Supply Pressures, Geopolitical Tension
Crude oil prices increase on Tuesday amid growing tension in Eastern Europe and the Middle East, fueling concerns over supply disruptions.
This is coming at the time when members of the Organisation of Petroleum Exporting Countries are battling issues mitigating their abilities to meet quota.
Many OPEC members have been underproducing, including Nigeria and Angola. International benchmark Brent crude was trading at $86.21 per barrel, up 0.91% after closing the previous session at $85.43 a barrel.
This is worsened by geopolitical tensions, while Libya faces disruption.
American benchmark West Texas Intermediate (WTI) was at $83.92 per barrel at the same time for a 0.73% rise after trade in the previous session ended at $83.31 a barrel.
On Monday, NATO announced that it sent military forces with more ships and fighter jets to Eastern Europe in response to Russian troops on the Ukraine border. Read Oil Dips as Tension Escalates in Middle East, China Sees Delta Surge
Meanwhile, in the Middle East, Yemen’s Houthi movement launched a missile attack at the United Arab Emirates on Monday, threatening secure oil supplies from the region.
With a rise in the geopolitical risks in these regions, global markets are more concerned with supply security resulting in accelerated purchases. Experts say major oil price increases are on the cards if tensions further increase.
On the supply side, OPEC producers are failing to meet their monthly quotas under the OPEC+ deal with Russia and its allies to add 400,000 barrels per day.
Yesterday, Crude oil fell sharply on prevailing risk-off sentiment across markets. The US Federal Open Market Committee is set to discuss the economic outlook, but concerns are growing that the committee may raise rates more quickly than expected amid high inflation, the bank noted.
A stronger US dollar also weighed on investor appetite, according to ANZ Bank. The selloff comes after oil started the year with strong gains, amid robust demand despite surging coronavirus cases globally.
According to Saudi Aramco CEO Amin Nasser, demand is nearing pre-pandemic levels, but he warned that producers were investing too little, which is resulting in the Organization of the Petroleum Exporting Countries struggling to increase output, the bank said.
#Oil Prices Increase on Supply Pressures, Geopolitical Tension
