US oil exceeds $90 a barrel in latest price surge

The benchmark for US crude broke through US$90 a barrel yesterday for the first time since 2014 as a cold weather snap across the US exacerbates ongoing supply concerns, amid broader geopolitical tensions.

West Texas Intermediate crude surged by 2.3% to close trading at $90.27 a barrel, while global benchmark Brent crude settled at $91.11 a barrel after a 1.8% rise.

Fears that an extended cold weather period could hit production in Texas contributed to a late rally in the oil price on Thursday afternoon. “It’s hysteria or a kind of fear,” said Bob Yawger, director of energy futures at Mizuho. “In the last hour, the talk has started to drive [oil] higher.”

Investors have also been bracing themselves for the impact of potential military action by Russia – the world’s second largest oil producer – in Ukraine, which would send shockwaves through the oil and gas market.

Crude benchmarks have been edging higher for weeks based on expectations of tightening supply, even after OPEC+ agreed to stick to moderate output increases throughout the cartel.

A host of analysts are now pointing to a march towards $100 a barrel oil prices, including Goldman Sachs. The investment bank predicts the barrier will be broken in third quarter and said that OPEC+ might even consider a faster unwinding of its production cuts.