On Tuesday, oil prices climbed to seven-year highs formerly seen in 2014. Oil’s move comes as investors are worrying over geopolitical tensions between the United Arab Emirates (UAE) and Rusa that could increase volatility in energy stocks.
What Happened: Brent crude futures rose $1.03, or 1.2%, to end trading at $87.51 a barrel. U.S. West Texas Intermediate (WTI) crude futures ended at $1.61, or 1.9%, higher at $85.43 per barrel.
Why it Matters: Concerns mounted this week after the Yemen Houthi group attacked the UAE, which has exacerbated hostilities between the Iran-aligned organization and a Saudi-led coalition.
On the Russian side, the country has built up a large military presence on Ukraine’s border, creating tensions with the OPEC+ countries and Russia that could halt the Nord Stream 2 pipeline that goes from Russia to central Europe.
What People Are Saying: “The damage to the UAE oil facilities in Abu Dhabi is not significant in itself, but it raises the question of even more supply disruptions in the region in 2022,” said Rystad Energy’s senior oil markets analyst Louise Dickson.
“The attack raises the geopolitical risk in the region and may signal the Iran-U.S. nuclear deal is off the table for the foreseeable future, meaning Iranian oil barrels are off the market, boosting demand for similar grade crude originating elsewhere,” Dickson added.