Oil prices rose over 3% on Friday to fresh seven-year highs on escalating tensions over Ukraine, and after the International Energy Agency (IEA) said oil markets were tight.
British Prime Minister Boris Johnson impressed the need for NATO allies to make it absolutely clear that there will be a heavy package of economic sanctions ready to go, should Russia make the devastating and destructive decision to invade Ukraine. Britain has advised its nationals to leave Ukraine.
U.S. senators, who have been negotiating for weeks on a bill to punish Russia for its troop build up near Ukraine, are still looking for a way forward, aides said after the sides reached an impasse.
Brent crude futures rose $1.9, or 3.4%, to $94.56 a barrel by 2:06 p.m. ET (1906 GMT). U.S. West Texas Intermediate crude gained $3.7, or 4%, to $93.40 a barrel.
Both benchmarks touched their highest since late 2014, surpassing the record highs hit on Monday, and were on track for their eighth weekly gains on growing concerns about global supplies as demand recovers from the coronavirus pandemic.
The IEA raised its 2022 demand forecast and expects global demand to expand by 3.2 million barrels per day (bpd) this year, reaching an all-time record 100.6 million bpd. [IEA/M]
The energy watchdog also said in its monthly report that Saudi Arabia and the United Arab Emirates could help to calm volatile oil markets if they pumped more crude, adding that the OPEC+ alliance produced 900,000 barrels per day (bpd) below target in January.
The two OPEC producers have the most spare production capacity and could help to relieve dwindling global oil inventories that have been among factors pushing prices towards $100 a barrel, deepening inflation worldwide.
Earlier this week, the Organization of the Petroleum Exporting Countries said world oil demand might rise even more steeply this year on a strong post-pandemic economic recovery. [OPEC/M]
The Biden administration responded to high prices by again stating this week that it has been talking with large producers about more output, as well as the possibility of additional strategic releases from large consumers, as it did late last year.
U.S. oil drillers this week added the most rigs in four years, with the rig count rising 19 to 516, its highest since April 2020, energy services firm Baker Hughes Co said. [RIG/U]
Indirect talks between the United States and Iran resumed this week after a 10-day break. A deal could see the lifting of sanctions on Iranian oil and ease global supply tightness.
Earlier this week, inventory data fed supply concerns after an unexpected 4.8 million-barrel drop in U.S. crude stocks.
“We can go on and on and on about Russia and Iran, but that’s all just speculation. At the end of the day there is a no denying crude oil storage is low,” said Robert Yawger, director of energy futures at Mizuho.
(Additional reporting by Ahmad Ghaddar and Ron Bousso in London; Emily Chow in Beijing; Editing by Marguerita Choy and David Gregorio)
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