Oil hits fresh 7-year high as it hovers near $100
Mounting fears that Russia’s invasion of Ukraine is “imminent” sent oil prices to their highest in more than seven years.
Brent crude (BZ=F) hit $96 a barrel for the first time since September 2014, with analysts predicting it could well surpass the $100 mark amid fears that supplies could be disrupted by potential sanctions should Russia invade Ukraine.
Oil prices will remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation,” OANDA analyst Edward Moya said in a note.
“If PBS reporting is correct and troop movement happens, Brent crude won’t have any trouble rallying above the $100 level.”
The West Texas Intermediate (CL=F) crude rose $1.41, or 1.5%, to $94.51 a barrel, hovering near a session-high of $94.94.
"Energy markets are clearly on edge and if supplies are threatened there is a risk oil will shoot up even higher, adding to price pressures for companies,” said Susannah Streeter, senior investment analyst at Hargreaves Lansdown.
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"The turbulence in energy markets is being reflected in the stock markets, with banks being hit as they are not only exposed to Russia through outstanding loans (SocGen, UniCredit etc) but also fears that Russia could be cut off from the Swift payments network," Neil Wilson, chief market analyst for markets.com, said.
BP (BP.L) shares were down almost 3% despite the spike in oil prices due to its stake in Rosneft.
Shell's (SHEL.L) share price was also down on Monday despite the oil climb, with shares retreating 2%.
But the rally might still benefit the oil majors as Howie Lee, an economist at Oversea Chinese Banking, said $100 was “in sight” as 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 $100, even with demand staying at current levels,” he added.
Gary Ross, chief executive at Black Gold Investors, said $100 was “justified” based on inventory levels and spare capacity.
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Governments have told their citizens to leave Ukraine and US national security adviser Jake Sullivan warned last week that an invasion could begin "any day now" and would likely start with "a significant barrage of missiles and bomb attacks".
The crisis comes with crude already tight, owing to a pick-up in demand as economies reopen after the coronavirus pandemic.