Brent touches $90 a barrel for the first time since 2014

Oil markets rallied alongside a broader market rebound while rising tensions in the Russia-Ukraine conflict caused jitters in the market about potential supply disruptions.

Futures in New York rose as much as 2% with the global benchmark touching $90 a barrel for the first time in seven years on Wednesday. Inventories at the largest U.S. oil hub fell 1.8 million barrels for the third week in a row. The oil market’s structure has surged in recent days, signaling tight supply.

Prices are also moving on mounting concern over a possible Russian incursion into Ukraine, with U.S. President Joe Biden saying he’d consider sanctioning Vladimir Putin if the Russian leader orders an invasion. While a potential conflict carries large risks for financial markets — especially energy commodities such as natural gas and oil — Goldman Sachs’s base case is for no disruption to supplies.

Crude is having a volatile week, slumping Monday then rebounding Tuesday. Prices are at a seven-year high with demand continuing to recover from the pandemic as mobility picks up. A string of Wall Street banks including Goldman Sachs Group Inc. have forecast oil will hit $100 a barrel this year as the global market tightens.

“The market has basically been in persistent undersupply since mid-2020, thanks to OPEC+ cuts and a continued oil demand recovery,” said Helge Andre Martinsen, a senior oil analyst at DNB ASA. “We fully acknowledge that the world is not running out of oil resources, but we might enter an oil-market squeeze triggered by too little investment and oil demand rebounding quickly.”

Prices

• Brent for March settlement rose 2% to $89.97 a barrel at 10:50 a.m. in New York.
• West Texas Intermediate for March delivery advanced 2% to $87.30 a barrel.

Also in focus Wednesday is the Federal Reserve’s first policy-setting meeting of the year. Officials are expected to reaffirm their commitment to containing roaring inflation by ending stimulus and raising interest rates over 2022.

Related coverage:

• More Chinese are joining a great travel rush back to their home towns for the Lunar New Year holiday, aiding oil demand.
• Surging energy prices and a tight rein on spending have driven Big Oil’s cash flow to a new high, enticing back investors.
• Qatar’s emir will visit President Joe Biden on Jan. 31 and discuss issues including how to ensure stability of global energy supplies.