Oil Prices Soar On Heightened Tensions in The Midd...

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Feb 17, 2021

Oil Prices Soar On Heightened Tensions in The Middle-East

Oil prices soared on Monday to their highest in about 13 months after gaining 5 percent last week, as fears of heightened tensions in the Middle East prompted fresh buying, and hopes that a U.S. stimulus and an easing of lockdowns will prop up fuel demand provided support.

Brent crude was up $1.09, or 1.8percent, at $63.52 a barrel at 0428 GMT, after climbing to a session high of $63.76, the highest since January 22, 2020.

US West Texas Intermediate (WTI) crude futures gained $1.28, or 2.2 percent, to $60.75 a barrel. It touched the highest since January 8 last year of $60.95 earlier in the session.

The Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, raising fears of fresh Middle East tensions.

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"An early spike in oil markets was triggered by the news," said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

"But the rally was also driven by growing hopes that a US stimulus and easing of lockdowns will boost the economy and fuel demand," he said. WTI may be pulled back by profit-taking as it reached a key $60 level," he added.

US President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan.

Oil prices have rallied over recent weeks also as supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.

"On top of that, robust global stock markets boosted investors' risk appetite," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Asian shares advanced to record highs on Monday as successful coronavirus vaccine rollouts globally raise hopes of a rapid economic recovery amid new financial aid from Washington.
"With cheap money supply amid monetary easing worldwide, the swift rollout of the vaccine, and tight supply from OPEC+ and U.S. shale oil producers, crude oil prices may be headed toward $70 a barrel," Yoshida said.