Hitting a Seven-Year High What is the prospect of rising international oil prices

Affected by geopolitical tensions in the Middle East and Eastern Europe and other factors, international oil prices have been rising recently, and the price of crude oil futures in the New York market hit the highest level
since October 2014 on the 18th.
Market analysts believe that the imbalance between supply and demand in the crude oil market is expected to strengthen, and international oil prices are expected to maintain an upward trend in the short and medium term, but in the long run, it will be affected by multiple factors, and all parties have different views on the trend
.

As of the close of trading on the 18th, light crude oil futures for February 2022 delivery on the New York Mercantile Exchange rose by $1.
61, or 1.
92%, to close at $85.
43 per barrel; London Brent crude futures for March 2022 delivery rose $1.
45, or 1.
68%, to settle at $87.
51 a barrel
.

Analysts believe that the seven-year high in oil prices is mainly driven
by two factors.

On the one hand, tensions between Russia and Ukraine have not eased, and the security situation in the Middle East has deteriorated, exacerbating market concerns
about supply reductions or even disruptions in major oil and gas producers.

On the 17th, Abu Dhabi, the capital of the United Arab Emirates, exploded a tank truck and an airport construction site fire, causing many deaths and injuries
.
Upon investigation, the explosion may have been caused
by a drone strike.
As the third largest producer of the Organization of the Petroleum Exporting Countries (OPEC), the UAE's crude oil supply is considered to be at real risk of
disruption.

Torbjorn Saltewaite, an analyst at Veliske-Maple Croft Consulting, a global risk and strategy consultancy, said that in addition to concerns about the hit on oil infrastructure, the market is also watching the progress of
Iran's nuclear negotiations.
As the negotiations tick, the risk of a deterioration in the security situation in the region increases, and the risk premium for oil prices from the situation in the Middle East will be more concerned
.

On the other hand, the market's expectations for oversupply in the crude oil market in the first quarter of 2022 have changed as the impact of the mutated Omicron strain on crude oil demand has not
been as severe as expected.

Phil Flynn, a market analyst at Price Futures Group, said that as air travel reopens, fuel supplies will tighten and global crude oil demand will approach record highs
.

Looking forward to the trend of oil prices, most research institutions believe that oil prices will maintain an upward trend
in the short term.

The U.
S
.
Energy Information Administration recently released a report raising the average price forecast for Brent crude oil futures in 2022 from $70 to $75 per barrel.

The report released by Goldman Sachs Group believes that the impact of the epidemic on crude oil demand is mild and short-lived, and the market supply gap will be very large, and it is expected that the price of Brent crude oil futures will exceed $100 per barrel in the third quarter of 2022 and rise to $105 per barrel in 2023
.

Goldman Sachs expects oil inventories in OECD members to fall to their lowest level since 2000 by the summer of 2022, and surplus oil capacity in major producers to historic
lows.

Flynn said that as oil prices rise, the Federal Reserve will take steps to combat inflationary pressures
.
If higher energy prices lead to a recession, they may reverse the fundamental support
of oil prices.

Contrary to Goldman Sachs' optimistic expectations, the US Energy Information Administration report expects the average Brent crude futures price to fall back to $68 per barrel in 2023, while Citigroup expects Brent oil prices to fall to $
54 per barrel over the same period.