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An oil pump at sunset in Daqing, Heilongjiang province, China, on July 13, 2006.
Lucas Schifres | Getty Images

Brent crude futures, the international oil benchmark, topped $90 on Wednesday for the first time since 2014, adding to oil’s blistering recovery since its pandemic-era lows in April 2020.

The leg higher comes amid growing geopolitical tensions between Russia and Ukraine, and as supply remains tight amid a rebound in demand.

The contract added more than 2%, hitting $90.07. West Texas Intermediate crude futures, the U.S. oil benchmark, also advanced more than 2% to $87.43 per barrel.

CIBC Private Wealth’s Rebecca Babin said the catalyst for higher crude prices is potential sanctions on Russia, which would be triggered by a Ukraine invasion.

“[E]ach day that passes without a de-escalation, we could see more of a supporting bid to crude,” she said.

Goldman Sachs said Wednesday that the firm’s base case is that supply disruptions are unlikely to occur, but that there could be upside for energy prices given an already tight market.

“Commodity markets are increasingly vulnerable to disruptions, after a couple years of historically low outages following the initial Covid shock,” the firm wrote in a note to clients. “Against the backdrop of the tightest inventory levels in decades, low spare capacity and a much less elastic shale sector, this points to the skew of large energy price moves shifting to the upside, reinforcing the case for a rising allocating to commodities in portfolios.”

Earlier this month, Goldman Sachs said that Brent can reach $100 per barrel by the third quarter, adding to a number of Wall Street firms calling for triple-digit oil.

Barclays noted that while prices may be reacting in part to a “geopolitical premium,” the underlying fundamentals are fueling the push higher.

OPEC and its oil-producing allies have been returning oil to the market but the group’s been unable to ramp up production to hit its targets. Meanwhile U.S. shale oil growth has been low, and omicron hasn’t been the demand hit that was initially expected. Additionally, inventory levels remain depleted.

The Energy Information Administration said Wednesday that crude oil inventories rose by 2.4 million barrels during the week ending Jan. 21. The Street was expecting a build of 150,000 barrels, according to estimates compiled by FactSet.

“Immediately it becomes a question how long we’ll be waiting for triple figures,” said Oanda’s Craig Erlam. “It’s still unlikely that oil and gas will be used as a weapon any time soon but if it was, it could lead to a serious surge in prices given how tight the markets are.”

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