LONDON The price of oil hit its highest level since 2014 on Tuesday after the tensions between Russia and Ukraine intensified following Moscow sent troops into two areas of the eastern part of Ukraine which exacerbated the supply issues that are pushing prices to close to $100 a barrel.
The United States and its European allies are preparing to declare new sanctions towards Russia after Russian President Vladimir Putin formally recognized the two regions of eastern Ukraine and escalated a security crisis across the continent.
“The possibility of an upward trend of more than $100 a barrel has seen a massive increase,” said Tamas Varga of the oil broker PVM. “Those who been betting on such a rally expected the rise of the war.”
If Russia invades Ukraine, oil prices would rise to $120 per barrel, according to a strategist.
Brent crude oil, which is the world benchmark Brent crude, the global benchmark, traded up $3.48 (or 3.7 percent, at $98.87 after having previously climbed to $99.38 which was the highest level since September 2014.
US West Texas Intermediate (WTI) crude surged $4.41 or 4.8 percent in the last 24 hours, reaching $95.48 in comparison to Friday’s closing which was earlier $96 which was also the highest level since the year 2014. This was also the most high level since 2014 US market was shut on Monday to observe a national holiday.
The turmoil over Ukraine is adding further aid to a marketplace for oil that’s seen a surge due to the shortage of supplies as demand picks up after the pandemic of coronavirus.
The Organisation of the Petroleum Exporting Countries and their allies, also known by the acronym OPEC+, have resisted demands to increase the supply quickly.
A top British minister told the BBC on Tuesday that the invasion of Russia into Ukraine has led to a crisis similar to in 1962’s Cuban missile crisis when an uneasy confrontation with both the United States and the Soviet Union brought the world closer to nuclear war.
The minister of petroleum in Nigeria Tuesday reiterated the OPEC+ view that a greater production was not needed in light of the prospect of increased production coming from Iran should its nuclear deal with world powers get renewed.
The talks are in progress about renewing Iran’s nuclear accord with world powers. This could increase Iran’s oil exports by more than 1 million barrels a day.