Oil prices gained to the highest price level in more than a year as supply fears strengthened over rising tension in the Middle East prompted fresh buying.
At the time of writing this report, Brent crude surged by 1.8%, at $63.52 a barrel, after rallying to a session high of $63.76, the highest price sighted since Jan. 22, 2020.
Also, the U.S based oil contract, WTI futures gained 2.2%, to trade at $60.75 a barrel. It touched the highest since January 8, 2020.
READ: Oil prices near $60 a barrel, OPEC+ stays resolute on supply cuts
It’s key to note that Oil prices had previously rallied by around 5% last week.
The Saudi-led coalition fighting in Yemen revealed late night yesterday that it had earlier destroyed an explosive-laden drone fired by an Iran supported rebel faction targeted towards Saudi Arabia thereby raising fears of fresh Middle East tensions.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on other macros pushing oil prices at record high;
“Finally, with the market-based inflation readings snapping back to pre-Covid-19 levels, commodities, particularly oil, provide an exacting breakeven hedge against inflation.
“So, the combination of mother nature supply disruption fusing with real demand and in addition to that in cross-asset trades using oi future as a perfect inflation hedge, February has surprisingly morphed into a mini oil supercycle.”
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What to expect: Although recent comments from Russian Energy Minister, Alexander Novak reveal the Russians might decide to pump more oil into a properly controlled energy market amid soaring oil prices, still, the energy market continues to focus on inflation break-evens and good old mother nature.