Crude Oil Hovers Near Seven-Year Peak Ahead of OPEC+ Meeting

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher late in the session on Monday. Prices remain close to a seven-year peak reached Friday, having climbed for six weeks straight as the geopolitical tensions in Ukraine and the Middle East exacerbated concerns over tight energy supply. Volume is a little on the light side ahead of OPEC’s production decision later in the week.

At 20:35 GMT, March WTI crude oil futures are trading $88.35, up $1.53 or +1.76% and April Brent crude oil is at $89.49, up $0.97 or +1.10%. The United States Oil Fund ETF (USO) is trading $62.49, up $0.52 or +0.84%.

NATO Concerned over Europe’s Energy Security amid Standoff with Russia

Europe needs to diversify its energy supplies, the head of NATO said on Sunday, as Britain warned it was “highly likely” that Russia, the continent’s biggest natural gas supplier, was looking to invade Ukraine.

Russia has massed some 120,000 troops near its neighbor and demanded the western defense alliance withdraw troops and weapons from Eastern Europe and bar Ukraine, a former Soviet state, from ever joining the Western defense alliance.

U.S. officials have said Russia’s military buildup has expanded to include supplies to treat casualties of any conflict. Across the border in Ukraine, locals trained as army reservists as the government scrambled to prepare.

Crude Oil Market Remains on Alert over Middle East Skirmish

Crude oil traders were on alert after the United Arab Emirates said on Monday it intercepted a ballistic missile fired by Yemen’s Iran-aligned Houthi movement as the UAE hosted Israeli President Isaac Herzog on his first visit to the Gulf business and tourism hub.

In the third such attack on the U.S.-allied Gulf state in the last two weeks, the Houthis’ military spokesman said they fired Zulfiqar missiles at Abu Dhabi and drones at Dubai.

OPEC+ Expected to Stick to Planned March Production Target Increase

Sources told Reuters that OPEC+ will probably stick with a planned increase in its oil output target for March when it meets on Wednesday, several sources from the producer group said, as it sees demand recovering despite downside risks from the pandemic and looming interest rate rises.

While two OPEC+ sources said oil at a seven-year high close to $90 a barrel might prompt the group to consider further steps, the vast majority of sources said no new decision was expected at the February online meeting.

One Russian source told Reuters the country was concerned the price rally might revive a boom in U.S. shale production.

“OPEC+ countries should be on high alert with this price level given the bullish forecasts for shale oil production in 2022,” the source said.