Oil at highest level since 2014 as Turkey outage hits
Oil prices have risen to their highest level since October 13 2014 as analysts forecast tight supply in 2022.
Part of that rise is down to demand holding up much better than expected as the highly contagious Omicron coronavirus variant spreads, with some analysts predicting the return of $100 oil, according to Reuters.
Oil prices rose for a fourth day as an outage on a pipeline from Iraq to Turkey increased concerns about an already tight supply outlook amid worrisome geopolitical troubles in Russia and the United Arab Emirates.
Brent crude futures rose 39 cents, or 0.5%, to $87.90 a barrel, adding to a 1.2% jump in the previous session. The benchmark contract had climbed to as much as $89.05 earlier in the session, its highest since October 13, 2014.
US West Texas Intermediate (WTI) crude futures climbed 64 cents, or 0.8%, to $86.07 a barrel, adding to yesterday’s 1.9% gain. WTI earlier jumped to $87.08, its highest since October 9, 2014.
Turkey’s state pipeline operator said it put out a blaze following an explosion that cut oil flow at the Kirkuk-Ceyhan pipeline, adding that it would be operational “as soon as possible”. The cause of the explosion is not known.
The pipeline carries crude out of Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), to the Turkish port of Ceyhan for export.
Concerns over Russia, the world’s second-largest oil producer, and the UAE, OPEC’s third-largest producer, are adding to supply fears.
The UAE has called for a meeting of the United Nations Security Council to condemn an attack on Abu Dhabi on Monday by Yemen’s Houthi movement, which has threatened further attacks.
Meanwhile, rising tensions between Russia and the West over the Ukraine raise the prospect of supply disruptions at a time when OPEC, Russia and their allies, together called OPEC+, are already having difficulty meeting their agreed target to add 400,000 barrels per day of supply each month.
“OPEC+ is falling short of hitting their production quotas and if geopolitical tensions continue to heat up, Brent crude might not need much of a push to get to $100 a barrel,” OANDA analyst Edward Moya said.
Jet fuel consumption is rising with growth in international flights, while road traffic is much higher than the same time last year, Commonwealth Bank commodities analyst Vivek Dhar said.
“OPEC+ supply constraints and the ongoing increase in global oil demand will likely keep oil prices well supported in coming months,” Dhar said.
OPEC officials have said that oil’s rally may continue in the next few months due to recovering demand and limited capacity in OPEC+, and prices could break $100 a barrel.
