By Gina Lee
Investing.com – Oil was up on Monday morning in Asia as it hovered around 7-year highs, buoyed by worries over short supply and geopolitical tensions in Eastern Europe and the Middle East.
Brent oil futures rose 0.76% to $89.68 by 9:27 PM ET (2:28 AM GMT) and WTI futures jumped 1.43% to $88.06.
Brent crude oil and US WTI crude hit a peak not seen since October 2014 on Friday, reaching $91.70 and $88.84 respectively for a sixth straight weekly gain.
"Underlying anxiety about global supply shortages, coupled with ongoing geopolitical risks, have caused the market to start the week on a strong note," Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd., told Reuters.
"With an expectation that OPEC+ will keep the existing policy of gradual increase of production, oil prices will likely stay on a bullish sentiment this week," he said, predicting Brent to remain above $90 a barrel and WTI to head toward $90.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, have raised their output target each month by 400,000 barrels per day (bpd) since August. This was to make up for record production cuts made in 2020.
But some members have struggled with capacity constraints, leading to a failure in meeting production targets.
At its upcoming meeting on Feb. 2, Reuters’ sources believe that OPEC+ is likely to stick with a planned rise in its oil output target for March. Demand is on the rise despite looming interest rate rises and other pandemic-related downside risks.
Another factor affecting crude prices is tensions between Russia and the West. Russia and the West have butted heads over Ukraine, causing worries over a possible disruption to European energy supplies.
On Sunday, the head of NATO said that Europe needs to diversify its energy supplies as Britain warned it was "highly likely" that Russia was looking to invade Ukraine.
Attacks on the United Arab Emirates by Yemen's Houthi group have also caused the market to be on edge.
In the meantime, more than 1,400 U.S. flights were canceled on Sunday. A deadly winter storm in the northeast states of the U.S. a day earlier prompted several states to declare emergencies.