Oil breaches $105 as Russia-Ukraine conflict intensifies
Major crude benchmarks hit their highest price levels since 2014
Oil prices surged on Thursday, with the major global crude benchmark, Brent, breaching $105 a barrel for the first time since 2014, amid concerns that the escalating crisis between Russia and Ukraine over the Donbass regions could disrupt global energy supplies.
On Thursday, Russian President Vladimir Putin announced a special military operation, aimed at “the defense” of the newly recognized republics of Donetsk and Lugansk. The first Russian airstrikes against Ukrainian military positions have been confirmed by Moscow.
The Brent crude price has since jumped to over $105 a barrel – the highest in over seven years. US West Texas Intermediate (WTI) crude futures soared over 8% to as much as $100 a barrel – the highest since 2014.
Oil prices have risen over $20 a barrel since the start of the year, amid fears that the United States and Europe would impose sanctions on Russia’s energy sector, disrupting supplies.
“This growing uncertainty during a time when the oil market is already tight does leave it vulnerable, and so prices are likely to remain volatile and elevated,” the head of ING’s commodity research, Warren Patterson told Reuters.
Analysts have raised concerns that the situation could worsen if the West places sanctions on the energy trade. Russia is the world’s second-largest crude oil producer and exporter.
“It’s not just geopolitical risk that is the problem, but the further straining of supply,” OCBC Bank economist Howie Lee has been quoted as saying by a number of media outlets. “Russian oil supply will disappear overnight if faced with sanctions … and OPEC can’t produce fast enough to cover this gaping hole,” he added.
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