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The tensions in Eastern Europe and the Middle East put pressure on the markets and have led the international price of oil to increase by 2% in recent weeks.
The international oil price increased this Monday, January 24, due to growing concerns of a possible supply interruption, amid concerns about tensions between Russia and Ukraine, as well as attacks in the Middle East.
Brent crude rose 33 cents to settle at $88.22 a barrel, while US West Texas Intermediate gained 24 cents to settle at $85.38. “Oil prices are benefiting from supply risks and geopolitical tensions,” Commerzbank analyst Carsten Fritsch said.
Tensions in Ukraine have been on the rise for several months after the Kremlin mustered nearly 100,000 troops, according to the United States, near the Ukrainian border, raising fears of a supply disruption in Eastern Europe.
On Monday, the US State Department ordered the relatives of the diplomats to leave Ukraine.
Likewise, in the Middle East the conflict seems to be escalating: the United Arab Emirates intercepted and destroyed two Houthi ballistic missiles that were headed for the Gulf country. Last week there was an attack that left three victims.
“A new escalation of the conflict in Ukraine and the tense security situation in the Middle East justify a risk premium in the price of oil because the countries involved -Russia and the United Arab Emirates- are important members of OPEC +”, added the analyst from Commerzbank Carsten Fritsch.
JPMorgan said on Friday that the tensions could cause a “major spike” in oil prices. Even energy markets are likely to take a hit if tensions escalate into conflict.
Russia said on Monday that it remained a reliable energy supplier to Europe even in “periods of tension in our relations.”
Barclays bank expects the average oil price to rise by $5 a barrel this year, citing shrinking reserve capacity and heightened geopolitical risks.
This increase, the fifth in a row in recent weeks, has pushed the price of crude up to 2% to reach its highest since October 2014. While last year it rose 10% due to concerns about supply shortages.
Another factor that could raise prices in the short term is the goal set by OPEC+ exporting countries, which are having difficulty achieving their goal of increasing monthly production by 400,000 barrels per day.
with Reuters
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