Asian stocks fall on Ukraine fears as oil hits 7-year highs
Oil prices rose to their highest level in more than seven years on Monday on fears that a potential Russian invasion of Ukraine could trigger US and EU sanctions that would disrupt exports from the world’s top producer in an already tight market .
Brent crude futures stood at $95.56 a barrel at 02:35 GMT, up $1.12, or 1.2%, after hitting a high of $96.16, the highest since October 2014.
U.S. West Texas Intermediate (WTI) crude rose US$1.28, or 1.4%, to US$94.38 a barrel, near a high of US$94.94, the highest high since September 2014.
“If … a troop movement occurs, Brent crude will have no trouble climbing back above the $100 level,” OANDA analyst Edward Moya said in a note.
“Oil prices will remain extremely volatile and sensitive to progressive updates regarding the situation in Ukraine.”
Tensions arise as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, struggle to increase production despite monthly pledges to increase production by 400,000 barrels per day (bpd) until March.
The International Energy Agency said the gap between OPEC+ production and its target widened to 900,000 bpd in January, while JP Morgan said the gap for OPEC+ to it alone was 1.2 million bpd.
“We are noting signs of tension across the group: seven Opec-10 members failed to meet quota increases during the month, with the largest shortfall being Iraq,” the statement said. JP Morgan analysts in a Feb. 11 note.
The bank added that a super cycle is in full swing with “oil prices likely to rise above $125 a barrel due to the widening spare capacity risk premium.”
Investors are also watching talks between the United States and Iran to revive the 2015 nuclear deal.