Oil surged above $100 a barrel for the first time since 2014 as Russia attacked sites across Ukraine, triggering fears of a disruption to energy exports at a time of already tight supplies. Moneyweb Markets
Oil surged above $100 a barrel for the first time since 2014 as Russia attacked sites across Ukraine, triggering fears of a disruption to energy exports at a time of already tight supplies. Brent jumped almost 7% after President Vladimir Putin ordered Russian troops to strike military facilities across Ukraine. Kyiv called it a “full-scale invasion” and announced martial law, while Joe Biden said he would impose “severe sanctions” on Moscow.
Crude will probably average $110 in the second quarter of the year if the Ukraine conflict escalates, JPMorgan Chase & Co. said this week, before Thursday’s developments. The bank sees prices retreating to average $90 at the end of the year. The Biden administration is considering tapping its emergency reserves of oil again in coordination with allies to counter the surge in prices, Bloomberg reported on Wednesday.
Crude’s return to triple digits completes a prodigious recovery – barely imaginable a year ago – from the pandemic as the market flips from surplus to scarcity. It reflects a global economy rushing back to normality from Covid-19 and disruptions in the exports of raw materials of all kinds. “As demand recovers to pre-Covid levels, supply is really having a hard time,” said Giovanni Serio, global head of market analysis at Vitol Group, the world’s biggest independent oil trader.
OPEC+ is at the heart of the supply crunch. Besides Riyadh and Abu Dhabi in the Persian Gulf, under-investment and unrest are preventing several members from reviving output following deep cuts during the pandemic. The group delivered only 70% of last month’s scheduled boost, according to the IEA. The Paris-based adviser to rich countries estimates that OPEC+ is now pumping almost 1 million barrels a day of crude less than its target.
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