Oil prices have climbed up to their highest level in the past seven years, with an increase in tensions caused by a Houthi attack on the United Arab Emirates causing an increase in supply chain disruptions.
The benchmark oil price on Brent crude rose one percent by $0.88, making it $87.36 a barrel. The West Texas Intermediate crude rose even further by 1.5% at $1.23 to $85.05 a barrel.
The Houthi militants conducted a deadly attack on the United Arab Emirates’ capital Abu Dhabi on Monday, killing three, and causing the UAE to promise retaliation. The escalating tensions caused oil prices to jump to the highest price since October 2014.
The Houthis’ strikes set off explosions in fuel trucks. The escalating regional tensions led UAE oil firm ADNOC to activate business continuity plans to ensure there was an uninterrupted supply chain following the incident at the Mussafah fuel depot.
ADNOC said it would also be working to ensure the safety of its employees. The explosions by the Houthis killed three and caused a fire near the Abu Dhabi airport.
Adding to the regional issues is an ongoing rise in tensions between OPEC+ member Russia and Ukraine. Russia has amassed 100,000 troops at its border with the neighboring country, leading to three sets of diplomatic talks last week between the U.S. and allied nations with Russia to ease the escalation.
Energy analysts have pointed to the weeks of Russia-Ukraine tension as the cause of market tightness. A new threat of even worse relations in the Middle East could mean further deterioration.
Oil prices are expected by analysts to exceed pre-pandemic levels in the coming years, but where they will actually settle still remains uncertain. Regional tensions could wreak havoc on supply chains, and worsen the surge in pricing even further.