Oil prices surge to a 7-year high on the back of supply disruption fears and surging demand

• Brent and WTI oil prices on Tuesday hit their highest levels since October 2014. 
• Brent reached past $88 a barrel following an attack in Abu Dhabi that resulted in three deaths. 
• OPEC left its 2022 outlook for oil demand unchanged at 4.2 million barrels per day. 

Oil prices surpassed their highest levels since 2014 on Tuesday in the wake of a deadly oil  tanker attack in the Middle East that stoked supply concerns in a global market that’s seeing strong demand despite the ongoing coronavirus pandemic. 

Brent crude, the international benchmark, rose as much as 1.9% to $88.13, the highest price since October 2014. The move extended gains on Monday after an attack in Abu Dhabi claimed by Yemen’s Houthi rebels resulted in explosions at three petroleum tankers near state oil firm ADNOC’s storage facilities. ADNOC said in a statement that three of its employees died in the attack. 

Oil prices continued to increase even as ADNOC it was working to ensure “reliable, uninterrupted supply of products” to local and international customers.

West Texas Intermediate crude oil as much as 2.3% to $85.74, also its strongest price since October 2014. 

Brent oil prices have gained more than 10% so far this year on indications demand for the commodity hasn’t been dented in the face of the spread of the Omicron variant of the coronavirus. The Organization of the Petroleum Exporting Countries on Tuesday left its 2022 outlook for world oil demand at 4.2 million barrels a day 

“While the new Omicron variant may have an impact in 1H22, which is dependent on any further lockdown measures and rising hospitalizations levels impacting the workforce, projections for economic growth remain robust,” the group said in its January market report. “This is despite the current inflation levels, which are being addressed through monetary policy by key central banks.”

It said supply chain bottlenecks and ongoing trade issues remain key factors of uncertainty. 

Meanwhile, Goldman Sachs on Tuesday said Brent prices could surpass $100 a barrel later this year. The market remains “in a surprisingly large deficit” as the expected hit in demand from Omicron has so far been far smaller than that of the Delta variant, excluding China.