Heightened tensions between Russia and Ukraine pushed global crude oil prices to around $95 per barrel, stoking fears of increased inflationary pressure on a recovering economy.
Accordingly, prices inclined to a seven-year high level as fears escalated of an impending invasion of Ukraine by Russia.
Besides, a top energy producer added to concerns by citing tight global crude supplies.
The trend assumes significance as India is import-dependent to fulfil its crude oil needs.
Notably, the rise in crude oil prices can escalate domestic prices thereby triggering inflation.
Consequently, Brent prices rose to $95 per barrel and NYMEX WTI crude oil rose to seven years high near $94 per barrel on Monday.
“Crude oil prices witnessed sharp buying over concerns that Russia could invade Ukraine which may trigger US and European sanctions, disrupting Russian exports in a tight energy market,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
“Crude oil prices are trading up on tight supplies as the gap between OPEC plus output and its target widened to 900,000 bpd in January 2022.”
According to Kshitij Purohit, Lead Commodities and Currencies, CapitalVia Global Research: “Crude oil demand should continue to be a significant driver of price, and as long as that is the case, the market will likely continue to rise.”
“The US cautioned on Sunday that Russia might invade Ukraine at any time and even invent a pretext for an invasion, reiterating its commitment to protect ‘every inch’ of NATO territory.”
Furthermore, Anuj Gupta, VP Research, IIFL Securities said: “We are expecting the price to test $100 per barrel very soon.”
“Russia-Ukraine issue works as the main issue for the price rise. Although lower supplies also provide support to the prices.”
In addition, Navneet Damani, Sr. Vice President – Commodity & Currency Research, Motilal Oswal Financial Services said: “More clarity during the week will be needed and volatility could remain elevated for the energy complex.”
“Increased uncertainty between Russia and Ukraine is expected to keep crude prices supported at lower levels.”
