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Oil Prices Sustain Upward Swing, Brent Crude Hits $71.38/Barrel

Oil prices sustained their upward swing on Monday while stock markets trade was mixed as investors weighed worries over high inflation against the reopening of virus-hit economies.

A news report by AFP indicated that after Asian indices closed mostly lower, with sharp losses in Hong Kong and Shanghai, Europe pushed higher approaching the mid-way point.

Benchmark oil contract, Brent North Sea crude, which has been rising strongly on rebounding demand in the past few days, rose above $70 per barrel on Monday for the first time since January 2020 after an attack on energy facilities in Saudi Arabia.

Brent at one point peaked at $71.38, the highest level since January 2020, before falling back under $70 per barrel.

The strike on the Aramco facilities, including one of the world’s biggest oil ports by Yemen’s Huthi rebels Sunday, followed the bombing of the country’s capital Sanaa by a Saudi-led military coalition.

The rising hostilities underscore a dangerous intensification of Yemen’s conflict between the coalition-backed Yemeni government and the Iran-backed Huthis, despite a renewed US push to end the war in the crude-rich region.

While surging oil prices were boosting share price across the heavyweight energy sector, the Investment Director at Russ Mould, AJ Bell, projected the surge “will only add to the key concern which is dogging (stock) markets — namely the risk of runaway inflation and a resulting increase in interest rates.”

Other analysts forecast that a surge to inflation could force the Federal Reserve and other central banks to wind back the ultra-loose monetary policies that have been a key driver of a year-long equity market rally.

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