OPrices rose to their highest level since 2014 on Tuesday after a drone attack on production facilities in the United Arab Emirates raised fears of supply chain disruption.
Brent crude futures traded in London hit $88.13 a barrel as the threat of further geopolitical tensions added to a strong rally driven by soaring global demand.
Traders are already hammered by the disruption of global transport channels, while a series of blackouts, notably in Libya, have further affected production.
Meanwhile, the omicron variant had a more limited impact on demand than expected, as many countries avoided lockdown. Analysts at Opec, the oil-producing cartel, said they expected the variant’s effect to be “mild and short-lived”.
Goldman Sachs analysts have raised their forecast for oil and now expect it to top $100 a barrel by the third quarter.
Brent crude oil prices rose 50% last year after falling by more than a fifth in 2020. Prices rose on Tuesday after fighters from Yemen’s Houthi movement claimed they were behind a strike drone that caused an explosion and fire at a facility on the outskirts of Abu Dhabi, the capital of the UAE.
Warren Patterson, an ING analyst, said the potential impact of escalating tensions between Russia and Ukraine was adding pressure on prices, but disruption in Chinese demand could lead to further declines. of Brent.
He said: “Fundamentally, we also think the market is too complacent about demand risks around China and its zero-Covid policy.”
It came as Exxon Mobil, the US energy giant, has set an ambition to eliminate some of its greenhouse gas emissions by 2050 – the first time it has commit in this way. The company will develop a plan to eliminate emissions from Exxon’s refineries and other facilities, but will not aim to address the carbon produced by drivers and others who use its fuels.