NEW YORK - Oil prices went to their highest since 2014 as possible supply disruption after attacks in the Mideast Gulf added to an already tight supply outlook.
The price of crude futures rose 77 cents, or 0.9 per cent, to US $87.25 a barrel at 11.05 am EST. US West Texas Intermediate WTI crude futures rose to US $85.07 a barrel, or US $1.25, or 1.5 per cent. Trade on Monday was subdued because of a US public holiday.
Both benchmarks hit their highest since October 2014 with Brent at US $88.13 and WTI at US $85.74.
Supply concerns increased this week after Yemen's Houthi group attacked the United Arab Emirates, escalating hostilities between the Iran-aligned group and a Saudi Arabian-led coalition.
After launching drone and missile strikes that killed three people and set off explosions in fuel trucks, the Houthi movement warned it could target more facilities, while the UAE said it reserved the right to respond to terrorist attacks. The damage to Abu Dhabi's oil facilities is not significant in itself, but it raises the question of even more supply disruptions in the region in 2022, according to Rystad Energy's senior oil markets analyst Louise Dickson.
The attack raises the geopolitical risk in the region and may signal that the Iran-US nuclear deal is off the table for the foreseeable future, meaning Iranian crude barrels are off the market, boosting demand for similar grade crude originating elsewhere, Dickson said.
ADNOC has activated business continuity plans to ensure uninterrupted supply of products to its local and international customers after an incident at its Mussafah fuel depot.
The tensions between Ukraine and Russia are adding to the geopolitical price premiums.
Some producers within the Organization of the Petroleum Exporting Countries OPEC are struggling to pump at their allowed capacity under an agreement with Russia and allies to add 400,000 barrels per day each month.
OPEC said on Tuesday that the oil market would be well supported through the year, despite the Omicron coronavirus variant and expected interest rate hikes.
Goldman Sachs analysts believe that the oil inventories in OECD countries will fall to their lowest since 2000, with Brent oil prices rising to US $100 later this year.