Uncertainty over global oil supply amid Russia-Ukraine tension continued to support oil prices as Brent crude oil rose to $91.23 a barrel on Monday during the Asian trading session.
Brent crude oil trades near a seven-year high it attained on Friday at $91.70 a barrel to be on track to close the month with its largest gain since February 2021.
Oil has been on a bullish run since Russia furthers its aggression against Ukraine in a move the west interpreted as a possible invasion. Despite Russia saying otherwise, it has amassed more than 100,000 soldiers on the border with Ukraine and in annexed Crimea in recent weeks.
The huge presence of Russian soldiers at a border shared by Russia and Ukraine stoke fears that Moscow may be planning a new war with its neighbour and former province.
However, given that Russia exports about 5 million barrels of crude oil per day, mainly to Europe and other regions, a fallout means an outage of 5 million barrels per day from the current global oil supply. This could push crude oil even higher without de-escalation of the ongoing tension in the region.
“Underlying anxiety about global supply shortages, coupled with ongoing geopolitical risks, have caused the market to start the week on a strong note,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
Also, the fact that OPEC and allies have remained resolute in their agreement to gradually increase crude oil production against global calls to match demand and ease rising pumping prices in most regions, is expected to sustain crude oil at around $90 a barrel in the near term.
“With an expectation that OPEC+ will keep the existing policy of gradual increase of production, oil prices will likely stay on a bullish sentiment this week,” he said, predicting Brent to remain above $90 and WTI to head toward $90.
