Brent Continues to Climb Amidst Tension in the Middle East
It was only three weeks ago that we found ourselves speculating as to when Brent crude would break above $80 a barrel, and yet today the commodity appears to be heading towards $90.
On Tuesday morning, Brent crude continued its recent rally in the market, with prices climbing more than 1.3%, reaching their highest level since 2014. This impressive run has seen price increase more than 24% since the beginning of December.
So, what’s fuelling this surge in oil prices?
Tuesday morning’s jump in prices came after Yemen’s Houthi group claimed responsibility for a series of drone strikes on the United Arab Emirates (UAE). The attacks, which caused an explosion and a fire on the outskirts of Abu Dhabi, left three people dead and triggered concerns about escalating hostilities and potential disruptions in the global supply of oil.
Oil supply, which is already restricted by OPEC+, has been tightened even further in recent months as some members struggle to produce at their agreed capacity.
On the demand side, demand for oil is on the rise, as particularly cold winter temperatures across the northern hemisphere are driving an increase in demand for heating fuels.
Furthermore, fears that Omicron would lead to a fall in demand, which led to price slumps in November, have eased, increasing demand expectations for 2022 as the world attempts to put the pandemic behind it.
All these factors are leading analysts to speculate that demand will continue to outstrip supply in the near future, meaning that oil prices could bet set for even further rises in the coming weeks and months.
Depicted: Admirals MetaTrader 5 – Brent Crude Daily Chart. Date Range: 25 March 2021 – 18 January 2022. Date Captured: 18 January 2022. Past performance is not a reliable indicator of future results.
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