Brent crude futures, the international oil benchmark, topped $90 on Wednesday for the first time since 2014, adding to oil's blistering recovery since its pandemic-era lows in April 2020.
The threshold breakthrough comes amid growing geopolitical tensions between Russia and Ukraine, and as supply remains tight amid a rebound in demand.
The contract added more than 2%, hitting $90.07. West Texas Intermediate crude futures, the U.S. oil benchmark, also advanced more than 2% to $87.43 per barrel.
CIBC Private Wealth's Rebecca Babin said potential sanctions on Russia, which would be triggered by a Ukraine invasion, would be a catalyst for higher crude prices.
"Each day that passes without a de-escalation, we could see more of a supporting bid to crude," she said.
Goldman Sachs said Wednesday the firm's base case is that supply disruptions are unlikely to occur, but that there could be upside for energy prices given an already tight market.
"Commodity markets are increasingly vulnerable to disruptions, after a couple years of historically low outages following the initial Covid shock," the firm wrote in a note to clients.
"Against the backdrop of the tightest inventory levels in decades, low spare capacity and a much less elastic shale sector, this points to the skew of large energy price moves shifting to the upside, reinforcing the case for a rising allocating to commodities in portfolios."
Earlier this month, Goldman Sachs said that Brent can reach $100 per barrel by the third quarter, adding to a number of Wall Street firms calling for triple-digit oil.
Barclays noted that while prices may be reacting in part to a "geopolitical premium," the underlying fundamentals are fueling the push higher.
OPEC and its oil-producing allies have been returning crude to the market, but the group's been unable to ramp up production to hit its targets. Meanwhile, U.S. shale oil growth has slowed, and omicron hasn't been the demand hit that was initially expected. Additionally, inventory levels remain depleted.
The Energy Information Administration said Wednesday that crude oil inventories rose by 2.4 million barrels during the week ended Jan. 21. The Street was expecting an increase of just 150,000 barrels, according to estimates compiled by FactSet.
"Immediately it becomes a question how long we'll be waiting for triple figures," said Oanda's Craig Erlam. "It's still unlikely that oil and gas will be used as a weapon anytime soon but if it was, it could lead to a serious surge in prices given how tight the markets are."
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January 26, 2022 at 11:16PM
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Global oil benchmark tops $90 for the first time since 2014 - CNBC
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