Oil rose for an eighth straight week as tensions between Ukraine and Russia heightened concern about tight global supplies.
The global benchmark on Friday touched US$95 a barrel before paring gains.
West Texas Intermediate for March delivery rose 3.58 percent to US$93.10 a barrel, up 0.86 percent from a week earlier.
Photo: Reuters
Brent Crude for April delivery rose 3.31 percent to US$94.44, a weekly increase of 1.25 percent.
US National Security Adviser Jake Sullivan on Friday said that the US believes Russia could take offensive military action or attempt to spark a conflict inside Ukraine as early as next week.
A potential Russian invasion of Ukraine could not only disrupt crude supplies, but also spark retaliatory sanctions by the US.
Oil prices have soared in the past few weeks on speculation that demand could outpace supply as the global economy rebounds from the COVID-19 pandemic.
Russia has denied it plans to invade.
“The oil market was waiting for a major catalyst to justify a move above US$100, and it seems the Ukraine situation just took a turn for the worse,” said Edward Moya, Oanda Corp’s senior market analyst for the Americas. “If Russian troop movement is confirmed over the next week, crude supply disruption expectations could send oil another 10 percent higher.”
OPEC on Thursday said that the rebound in oil consumption could surpass its forecasts this year as economic activity improves and travel gathers pace.
The OPEC+ coalition’s “chronic” struggle to revive output is also likely to support prices, unless the group’s Middle Eastern heavyweights pump more, the International Energy Agency said.
“The oil market is incredibly tight,” Toril Bosoni, head of the agency’s oil markets division, said in a Bloomberg Television interview on Friday. “Prices continue to surge and are now reaching levels that are uncomfortable for consumers across the world.”
Yet oil’s rally is facing some headwinds, as officials from the US to Europe have said that sides are closing in on a nuclear pact after talks resumed in Vienna on Tuesday.
Bank of America Corp said its expectation that Brent will hit US$120 a barrel by the middle of the year is now at risk as the Iranian nuclear negotiations proceed.
The deal could tip markets into a surplus of as much as 1 million barrels a day in the second half of the yer, pushing Brent down by US$10 to US$15 a barrel.
“An Iran deal would be a game-changer, potentially pushing the global petroleum market into a surplus,” Bank of America analysts led by Francisco Blanch wrote in a report.
Additional reporting by staff writer
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