Crude oil prices soar over 2% on fears of supply-crunch, escalating geopolitical risk
by SOURAV D | VIEW 879
Crude Oil prices soared more than 2 per cent over mounting worries of an imminent supply-crunch. Tuesday’s steep gain in crude oil futures’ prices comes over the heels of concerning narratives regarding an acceleration in geo-political tension with NATO Secretary General Stoltenberg saying the NATO troops will not engage in Ukraine border issue which Croatian President Zoran Milanovic has claimed to have exasperated by the United States President Joe Biden alongside his administration’s foreign policy, while growing threats to oil infrastructures and US military bases in UAE from Houthi rebels as well as OPEC+ nations’ failure to hit output targets, add to frets of a potential supply lag in a near term, eventually spurring up oil prices. Even as the US Fed is expected to voice a hawkish tone regarding its rate-hike policy following an ongoing January meet, which usually is seen as a negative impetus for riskier assets such as oil and growth stocks among others, surging geopolitical tensions appear to have outweighed the consequences of a rate-hike by the US Federal Reserve as early as by March.
Oil rallies as OPEC+ drag, geopolitical angsts weigh
Citing statistics, in the day’s commodity market wind-down, UK crude futures’ prices climbed 2.2 per cent to $88.20 a barrel, while US WTI (West Texas Intermediate) crude oil contracts gained 2.8 per cent to settle at $85.60 per barrel.
Meanwhile, addressing to a tempestuous geopolitical landscape, a senior market analyst at OANDA, Edward Moya said in the day’s commodity market wind-down, “Geopolitical risks sent crude prices higher as a tight oil market that is already battling low inventories seems vulnerable to shortages in the coming months.
Energy traders don’t know how the situation over the Ukraine-Russia border will unfold or if Iran will be able to reach a nuclear deal, but the odds are something won’t go right and that will likely lead to some supply shortages for the oil market. ”