Oil prices have risen to the highest level since 2014, helping to lift oil stocks higher Wednesday. Rising geopolitical fears coupled with the ongoing OPEC output cap, means the price of Brent crude oil is moving closer to the $70 per barrel level.
By 1415 BST, the oil price was still rising. The price of Brent crude oil was 0.48% higher at $69.15 per barrel. Meanwhile, the price of US WTI crude oil was 0.76% higher at $63.44 per barrel.
Higher oil prices helped support oil major stock prices.
Royal Dutch Shell shares were 0.66% higher at £2,586 while BP shares gained 0.57% to £535.50, in the UK. US listed oil stocks, ConocoPhilips, Exxon Mobil and Chevron are all poised to open higher Wednesday, according to pre-market activity.
Output cap, strong demand and geopolitics lift oil price
The rising oil price comes as the extended OPEC and Russia oil output cap remains firmly in place until the end of 2018. In the meantime, data shows continued strong demand for oil, while the International Energy Administration has increased its forecast for oil demand in 2018 by 100,000 barrels.
Kurdish forces hold Iraqi oil fields which has also exacerbated the lower level of oil output and exports. However, the Iraqi oil minister said Tuesday that oil exports should begin to flow from the country by the end of January.
Potential for oil to hit $80 per barrel
Amid the rising price of oil, Citi’s latest research on how Wildcard’s could affect the markets in 2018, includes details on what could push the price of Brent crude oil up to $80 per barrel.
Citi pinpointed Middle East tensions, Donald Trump and Kim Jong Un as potential wildcards that could lift oil prices.
“Many of these uncertainties have significant consequences for commodities,” Citigroup analysts wrote in the ‘Wildcards for 2018’ report.
But other analysts are highlighting the increasing levels of US oil production as a potential barrier to prices maintaining high levels this year.