The international oil benchmark soared above $90 amid low output and tension in Eastern Europe
The price of a barrel of crude oil reached $90 on Wednesday, a level unseen since October 2014. It's the second seven-year record in a week, and insiders are predicting $100 oil by the year's end, the rise fueled by tight supply and the threat of war in Ukraine.
After closing at $88.20 on Tuesday, the Brent crude price climbed to $90.08 by late Wednesday morning, an increase of more than 2%. The US West Texas Intermediate benchmark was also up by 2.2%, sitting at $87.50 at time of writing.
The last time Brent spiked above $90 was in October 2014. Last week, the oil benchmark also hit a seven-year high, with that spike driven by hostilities in the United Arab Emirates.
The latest surge comes as the oil-producing OPEC nations slowly increase their output to pre-pandemic levels. However, these producers have not scaled up their spare capacity to buffer against future disruptions, and prices in turn have shown no sign of falling. Moreover, the US is lagging behind its record daily production by around a million barrels, per Reuters, and Russia is increasing its production at a slower rate than expected.
Further complicating matters is the simmering tension over Ukraine, with Washington refusing to drop its demand that Ukraine be allowed to join the NATO alliance and Moscow sticking by its long-held position that a NATO state on its borders would be unacceptable.
All in all, the combination of market and geopolitical factors has led Goldman Sachs to predict an oil price of more than $100 by the third quarter of this year. The all-time highest oil price ever recorded was $143, in mid-2008.