Oil prices surged on Tuesday, February 1, 2022, maintaining its highest price range in the past seven years. Expectations continues to persist that underwhelming production and tight supply conditions are bound to remain.
According to data monitored at ratecaptain.com Brent crude increased 0.4% at $89.60 a barrel at 04:54 GMT. U.S. West Texas Intermediate crude rose 0.4%, to $88.47 a barrel.
The rise in benchmarks brent crude prices are strongly correlated to low supply capacity in the oil market instigating from geopolitical tensions in Eastern Europe and the Middle East.
According to market analysts, Chronic underinvestment in new oil supply since the 2015 crisis and the pressure on oil and gas companies to curb emissions and even “keep it in the ground” will likely lead to peak global oil production earlier than previously expected.
Hiroyuki Kikukawa, research manager at Nissan, stated that the bullish nature of the oil market is being catalyzed by expectations of supply rigidity, geographical and political tension and OPEC+ decision on output mechanism
“The market is maintaining a bullish tone on expectations that supply tightness will continue as demand is picking up, with receding fears over spreading Omicron coronavirus variant, “All eyes are on OPEC+ decision as well as development of the conflict between Russia and the West over Ukraine,”
As tensions between Russia, the world’s second-largest oil producer and Ukraine escalates ,the USA and UK threatens heavy sanctions with reports suggesting the westerns countries are also considering freezing Putin’s allies assets. The oil market has been heavily disrupted by the geopolitical aggravations arising from the largest oil producing states.
Goldman Sachs, a leading investment bank, Goldman predicts OPEC+ will raise output amid surging oil prices. They noted that the outcome of Wednesday’s meeting remains evenly balanced between a hike of 400,000 barrels a day for March and a bigger increase
Words from Goldsman report “We view growing potential for a faster ramp-up at this meeting, given. We view growing potential for a faster ramp-up at this meeting, given the pace of the recent rally and the likely pressure from importing nations,” analysts including Damien Courvalin, Callum Bruce and Jeffrey Currie wrote in a report. “The producers’ group may also be growing more concerned by the hawkish central bank shift that could lead to slower global growth and oil revenues later this year. “the pace of the recent rally and the likely pressure from importing nations,”
Meanwhile in the Nigerian Oil market, Nigerian crude products, Brass River and Qua Iboe both gained 0.84% to close at $91.2 per barrel, while Bonny Light dipped 0.98% to close at $90.48 per barrel.