Oil prices have touched $90 a barrel, the highest since October 2014, driven by geopolitical tensions in eastern Europe and the Middle East amid a tight supply.
This hasn’t impacted domestic fuel prices as they have stayed unchanged for nearly three months. Prices are unlikely to go up ahead of assembly elections in five states next month, industry executives said. This would mean erosion in margins for state oil companies.
Geopolitical tensions between Russia and the Western powers over Ukraine have been the prime price driver in recent days. Russia has amassed a large number of troops on the Ukraine border, triggering warnings from the US that an invasion would be met with harsh sanctions.
If the situation escalates, it has the potential to upset the energy market as Russia is the largest exporter of natural gas to Europe and leads, along with Saudi Arabia, the group of producers’ which dominate the oil market.
Rising tensions in the Middle East between Yemen’s Houthi group on the one side and Saudi Arabia and the UAE on the other too have made the market nervous.
An artificial production curb by the producers’ group led by Russia and Saudi Arabia too has contributed to the tight market even as global demand has been strongly recovering. Some members of the producers’ group have found it hard to even meet their production quota, leading to lower than expected supplies.
