Oil touched $90 a barrel for the first time in seven years on Wednesday, supported by tight supply and rising political tensions in Europe and the Middle East that raised concerns about further disruption in an already-tight market.
Brent crude rose $1.67, or 1.9%, to $89.87 by 10:40 a.m. EST (1540 GMT), after hitting $90.02, the first time the global benchmark has broken that level since October 2014. U.S. West Texas Intermediate (WTI) crude was up $1.69, or 2%, to $87.28.
U.S. President Joe Biden said on Tuesday he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine. On Monday, Yemen’s Houthi movement launched a missile attack on a United Arab Emirates base.
“Anxiety over potential supply disruptions in the Middle East and Russia is providing bullish fodder for the oil market,” said Stephen Brennock of oil broker PVM.
The tensions have raised concerns about various factors contributing to an already tight market. The United States is more than a million barrels short of its record level of daily output, and OPEC+ is having trouble meeting its monthly production targets as it restores supply to markets after drastic cuts in 2020.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meets on Feb. 2 to consider another output increase.
Inventories in the United States rose in the most recent week, with crude stocks up by 2.4 million barrels, against expectations for a modest decline in stocks. Gasoline inventories rose to their highest levels in almost a year – a needed salve for the market.
Investors across the markets are awaiting the coming policy update from the U.S. Federal Reserve at 2 p.m. EST. The Fed is expected to signal plans to raise interest rates in March as it focuses on fighting inflation.