Crude oil prices climbed to levels not seen since 2014 on Tuesday, with geopolitical tensions in focus after an attack on an Abu Dhabi oil facility. as Goldman Sachs warns that “surprisingly large” supply deficits could see Brent prices top $100 a barrel next year.
Iran-backed Houthi rebels from Yemen claimed responsibility for the attack on the oil facility in Abu Dhabi that killed three people on Monday and caused a fire at the capital of United Arab Emirates’s international airport.
Added to the geopolitical strife are the rising tensions between Ukraine and OPEC+ member Russia. As it is, the Organization of Petroleum Exporting Countries (OPEC) are struggling to pump at their allowed capacities under an agreement with Russia and allies to add 400,000 barrels per day each month.
That being said, Exxon Mobil CEO Darren Woods is confident prices will trend lower, even as the oil executive said the market should expect volatile prices as the industry’s recovery from Covid-19 continues, according to CNBC News.
“As you get supply and demand tighter, events that happen around the OPEC members
world … lead to a lot more volatility because there’s less of a buffer, and I think we’re going to see that for some time now,” he said Tuesday on CNBC’s “Squawk Box.“
“Until industry begins to ramp up productions and increase the level of supply to meet this growing demand, or in turn, demand starts to come down a little bit … you’re going to see a lot more volatility until we get better stability.”
West Texas Intermediate crude futures, the U.S. oil benchmark, traded as high as $85.74 per barrel on Tuesday, a price last seen in October 2014.
International benchmark Brent crude broke above $88 per barrel, also hitting the highest level since 2014.
Meanwhile, according to Market Watch, Goldman Sachs rolled out higher oil price forecasts, setting a 2023 Brent spot target of $105 a barrel in 2023, with 2022 headed for $96 a barrel, it said.