Brent oil hits $91 a barrel as Ukraine worries persist

The rally in crude prices comes as the global economy contends with soaring inflation.

Oil tanks at the GS Caltex Corp oil refinery facility in the Yeosu Industrial Complex in Yeosu, South Korea
Benchmark futures added almost a dollar to trade near $91 a barrel on Thursday, while West Texas Intermediate was also the highest since 2014 [File: SeongJoon Cho/Bloomberg]

Brent oil hit a fresh seven-year high as a robust crude market countered the U.S. Federal Reserve’s indication that it would soon start raising interest rates to quell inflation.

Benchmark futures added almost a dollar to trade near $91 a barrel, while West Texas Intermediate was also the highest since 2014. The recent rally in oil comes as physical supplies appear extremely tight. Key swaps tied to the North Sea market that helps price much of the world’s oil are trading at their firmest since 2019, while gauges of market strength, known as timespreads, are trading at their strongest level since November.

On Wednesday, the Fed endorsed interest-rate liftoff in March and opened the door to more frequent, potentially larger hikes than expected. The rally in crude prices is coming as the global economy contends with rampant inflation.

Oil rally

Traders are also tracking events in Ukraine on concern that Russia may launch an invasion after massing thousands of troops on the border, potentially disrupting energy supplies. Moscow has denied it plans to invade, but Citigroup Inc. said a rise in crude volatility is a sign that the market is pricing in an increased political risk premium, potentially of at least $5 a barrel.

Oil has rallied in the opening weeks of 2022 on the continued recovery in energy consumption from the ravages of the coronavirus pandemic. With global demand coming in stronger than expected and growing concerns about how much further producers will ramp up output, stockpiles at some key hubs have been waning early in the year.

“The development into 2022 has been strictly bullish with declining inventories so far this year versus a normal seasonal trend of rising inventories,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “As long as the inventory declines continue like this, the bull-train will carry on.”


  • Brent for March settlement rose by 0.7% to $90.59 a barrel at 8:37 a.m in New York
  • WTI for March delivery added 0.8% to $88.09 a barrel

Inventories at the key U.S. storage hub at Cushing fell again last week to hit the lowest level for this time of year in a decade. At the same time weekly oil product consumption is at its highest level for the time of year in at least 30 years, driven in part by a spate of cold weather in the U.S.

The Organization of Petroleum Exporting Countries and its allies including Russia will get a chance to weigh in next week when they meet Feb. 2. The coalition will probably rubber-stamp a hike of 400,000 barrels a day for March, according to delegates.

Related coverage:

  • The U.S. physical crude market is pricing near its strongest level in more than a year, and could get even stronger.
  • U.S. gasoline futures are at the highest premium to crude for this time of year since 2013 as refiners struggle to build supply ahead of summer.
  • U.S. propane demand stayed near to a record last week as wintry weather blasted through much of the country.
Source: Bloomberg