WTI and Brent oil prices jump 2% on Friday afternoon, posting fresh multi-year highs of $92/b and $93/b respectively as investors digest the decision of the OPEC+ alliance to stick to its output plan at a time that global supply is tightening, extreme weather threats oil supplies in the U.S., and ongoing geopolitical risks add a price premium on the energy market.
Energy traders have been bullish on the crude oil, lifting WTI and Brent prices by 20% since the beginning of 2022, based on the limited spare capacity among the crude producers, the recovering fuel demand to pre-pandemic levels as economies emerge from the pandemic, and the geopolitical tensions in Ukraine and the Middle East.
Cold storm in the U.S lifts WTI oil prices:
Both oil contracts extended already sharp profits from the previous sessions on Friday following the growing concerns for a possible supply disruption from a massive Arctic storm in the United States.
WTI crude oil contract, Weekly chart
U.S.-based WTI crude climbed to as high as $92/b, its highest level since Oct.2014 as the extreme winter storm is threatening to disrupt crude oil supplies from the oil-rich state of Texas, and especially from the Permian Basin, the heart of Shale oil and gas production in the country.
The cold storm has already cancelled flights and closed schools across central and northeast United States, threatening crude oil supplies and power outages.
Geopolitical tensions support prices:
The ongoing tensions in the oil-rich Middle East and the border crisis between Ukraine and Russia threaten the already undersupplied global energy market, lifting crude oil prices to their highest levels since 2014.
Russia has been the main gas supplier of Europe, providing the 40% of the gas needs per year, while it also supplies a significant amount of crude oil and coal, necessary for the power generation especially these days during the heart of North’s Hemisphere winter.
Furthermore, the recent rocket and drone attacks to the United Arab Emirates from Yemen’s Houthi movement had added another supply-led geopolitical risk premium on oil prices, at a time some members in the OPEC alliance have been facing problems from producing at their quota levels.
Crude oil prices are heading towards $100 key psychological level, despite the gradual increase of oil output by the OPEC+ alliance, which agreed a few days ago to stick to moderate rises of 400,000 barrels per day (bpd) in oil output.
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