Oil Up, Hits 7

© Reuters

By Gina Lee

– Oil was up on Monday morning in Asia, hitting a more-than-seven-year high over concerns that Russia could invade Ukraine. An invasion could trigger U.S. and European sanctions, disrupting Russian exports in a market that is already tight.

Brent oil futures rose 1.22% to $95.59 by 10:57 PM ET (3:57 AM GMT), after earlier hitting $96.16, the highest since October 2014. WTI futures jumped 1.42% to $94.42, remaining near a session-high of $94.94, the highest since September 2014.

The U.S. warned on Sunday that Russia could invade Ukraine at any time and could create a surprise pretext for an attack, comments that have rattled global financial markets.

"If... troop movement happens, Brent crude won't have any trouble rallying above the $100 level. Oil prices will remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation," OANDA analyst Edward Moya said in a note.

These tensions come amid the Organization of the Petroleum Exporting Countries and allies' (OPEC+) struggle to meet its production goals. The cartel has pledged to increase production by 400,000 barrels per day (bpd) until March 2022.

The International Energy Agency said the gap between OPEC+ output and its target widened to 900,000 bpd in January 2022, while the gap for OPEC alone was at 1.2 million bpd, according to JP Morgan. "We note signs of strain across the group: seven members of OPEC-10 failed to meet quota increases in the month, with the largest shortfall exhibited by Iraq," JP Morgan analysts said in a Feb. 11 note.

A super-cycle is in full swing with "oil prices likely to overshoot to $125 a barrel on widening spare capacity risk premium", the note added.

Investors are also monitoring talks between the U.S. and Iran to revive a 2015 nuclear deal, which could potentially add Iranian supply to the global market. However, a senior Iranian security official warned on Monday that progress in talks was becoming "more difficult".

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