Oil surges to 7-year high above $90 per barrel as Russia-Ukraine tensions rise

• Oil prices have surged to seven-year highs amid simmering tensions between Russia and Ukraine.
• Traders are on the lookout for any disruption in oil production.
• While the Fed signaling an imminent rate hike generated selling pressures, Brent was above $90 a barrel Thursday, Commerzbank said.

Oil prices surged to seven-year highs on Thursday amid simmering tensions between Russia and Ukraine, outweighing clear signals of a tighter monetary policy from the Federal Reserve.

Brent crude gained around 1% to trade at $90.87 per barrel as of 7 a.m. ET for the first time since October 2014, as strong demand for the commodity outstripped global supply. West Texas Intermediate crude was trading at $88.22 per barrel, also its highest level in roughly seven years.

While a hawkish Fed signaling an imminent rate hike as early as March on Wednesday generated some selling pressures on the oil market, Brent was back above $90 a barrel on Thursday morning, Commerzbank analysts Daniel Briesemann and Carsten Fritsch pointed out.

"A more pronounced price slide is being prevented by the Ukraine crisis, as there are still concerns that Russian oil and gas deliveries could be hampered in the event of a military escalation," the bank said in a Thursday note.

For weeks, Russia has been amassing thousands of troops and artillery at Ukraine's border, roiling commodities markets. Ukraine and the US have warned of an imminent invasion but Russia has repeatedly claimed it's not planning such a move.

The rally in oil prices picked up this week when the conflict between the two nations heightened, drawing in the US and some European allies. Russia is the world's second-largest oil producer and traders are on the lookout for any disruption that may affect energy supplies to Europe.

JPMorgan economists last week said oil could soar to $150 a barrel during the first quarter of 2022 if the conflict leads to a supply shock.

Elsewhere, inventories at Cushing, Oklahoma — the delivery hub for the West Texas Intermediate crude futures contracts — fell for the third straight week, according to the Energy Department's status report.

The Organization of Petroleum Exporting Countries and its allies including Russia will meet on February 2.

Edward Moya, senior equity analyst at Oanda, said the coalition will likely stick to their plan of delivering another modest increase to production.

Brent oil prices for the year have gained more than 10% on indications that demand for the commodity hasn't dropped in the face of the spread of the Omicron variant.