Oil prices on Tuesday, Jan. 18th, climbed to their highest since 2014 as investors worried about global political tensions involving major producers such as the United Arab Emirates and Russia that could exacerbate the already tight supply outlook.
The risk added a premium to prices during the session. Brent crude futures rose $1.03, or 1.2%, to settle at $87.51 a barrel. U.S. West Texas Intermediate (WTI) crude futures ended $1.61, or 1.9%, higher at $85.43 a barrel.
Both benchmarks touched their highest since October 2014, and some OPEC sources say $100-per-barrel oil is not out of reach.
Supply concerns mounted this week after Yemen’s Houthi group attacked the United Arab Emirates, escalating hostilities between the Iran-aligned group and a Saudi Arabian-led coalition. read more
After launching drone and missile strikes that set off explosions in fuel trucks and killed three people, the Houthi movement warned it could target more facilities, while the UAE said it reserved the right to “respond to these terrorist attacks.”
The strike on a leading Gulf Arab ally of the United States takes the war between the Houthi group and a Saudi-led coalition to a new level and may hinder efforts to contain regional tensions as Washington and Tehran work to rescue a nuclear deal.
“The damage to the UAE oil facilities in Abu Dhabi is not significant in itself, but it raises the question of even more supply disruptions in the region in 2022,” said Rystad Energy’s senior oil markets analyst Louise Dickson.
“The attack raises the geopolitical risk in the region and may signal the Iran-U.S. nuclear deal is off the table for the foreseeable future, meaning Iranian oil barrels are off the market, boosting demand for similar grade crude originating elsewhere,” Dickson added.
Source: El Universal