Oil breaks above $90/barrel for first time since '14 amid rising geopolitical tension

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Oil breaks above $90/barrel for first time since '14 amid rising geopolitical tension

Despite assurances from an incumbent Biden Administration that global energy supply will not be disrupted in case of a rapid spike in geopolitical tensions, both US and UK crude oil futures jumped as much as 2 per cent on Wednesday, extending their latest leg of blistering rally, while Brent crude touches a $90 per barrel level for the first time since 2014 as mounting geopolitical tensions added to further strains on an already squeezed supply line.

In factuality, in the day’s steep gain in crude oil futures’ prices was almost entirely galvanized by an acceleration in tension over Ukraine issue with the US President Biden reportedly threatening a sanction on President Putin in lieu of deescalating angsts, provoking the severity of an incident that could have grievous geopolitical impact.

Besides, a group of US corporate giants also had warned the US President Biden, 75, about imposing any kind of sanction against President Putin which in effect would increase oil and gas prices to a record level in Europe and would have long-running repercussions.

Aside from that, as possibilities of a further deterioration in Opec+ output spur up following a Houthi attack on a US-based in UAE, oil rally gained further momentum. However, late in the day, crude oil prices had pared some of their gains after US Fed Chair Jerome Powell had signalled a rate-hike as early as March, dragging down a deluge of riskier assets including the black gold.

Crude oil prices climb above $90 per barrel

Citing statsitics, in the day’s commodity market wind-down, UK crude oil futures’ prices added 2 per cent to $89.96 after topping a $90-level for the first time since October 2014, while US WTI (West Texas Intermediate) contracts edged 2.0 per cent higher to $87.35 a barrel.

Meanwhile, addressing to a growing market fret over a plausible disruption in physical supplies, a chief geopolitical advisor at S&P Global Platts, Paul Sheldon said, “Markets are nervous that physical supply could be disrupted.

Most likely, flows will continue, but the risks are not negligible that something could affect physical balances.

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