| 7 February 2023, Tuesday |

Oil price hits $90 for the first time in seven years

Oil prices recovered in tandem with a broader market recovery, although escalating tensions in the Russia-Ukraine war exacerbated market worries about potential supply interruptions.

Futures in New York jumped as much as 2% on Wednesday, with the global benchmark reaching $90 a barrel for the first time in seven years. For the third week in a row, inventories at the largest US oil hub decreased by 1.8 million barrels. The structure of the oil market has shifted in recent days, indicating a lack of supply.

Prices are also rising as fears of a Russian intervention into Ukraine grow, with US President Joe Biden suggesting he would consider penalizing Russian President Vladimir Putin if he orders an attack.

While a potential conflict poses significant risks to financial markets, particularly energy commodities such as natural gas and oil, Goldman Sachs’ basic assumption is that supply would not be disrupted.

Crude has had a tumultuous week, falling on Monday and then rising on Tuesday. Prices are at a seven-year high, with demand recovering after the epidemic as mobility improves.

As the global market tightens, a number of Wall Street institutions, notably Goldman Sachs Group, predict that oil will reach $100 per barrel this year.

“The market has effectively been in sustained undersupply since mid-2020, owing to Opec+ cutbacks and a steady rebound in oil demand,” said Helge Andre Martinsen, senior oil analyst at DNB ASA.

“We clearly realize that the world’s oil supplies are not running out, but we may enter an oil-market squeeze caused by insufficient investment and a rapid rise in oil demand.”

  • The National News