Oil prices have surged upwards due to the war in Ukraine. Bullish traders rule the day as numerous risks influence the market, such as Russia putting its nuclear arsenal on alert. Brent's price of $100 per barrel is no longer an unthinkable development, as it seemed to be in January. The ongoing events in Eastern Europe will likely keep the commodity at this level.

Companies purchasing Russian oil now face problems with transferring cash to Russia due to the disconnection of several banks from SWIFT. Another serious issue is the lack of tankers for transporting oil to consumers. Supply disruptions are a significant driver for oil prices, and the current backwardation in the market is not something extraordinary.

The White House is trying its best to stabilize prices by releasing oil from the Strategic Petroleum Reserve. However, Biden cannot determine the commodity's price by himself - demand for oil is high. According to sources cited by Bloomberg, the United States and other countries including India are ready to release 60 million barrels of oil from their strategic reserves – equivalent to 6 days of Russian oil supply. Reuters and the Wall Street Journal claim 70 million barrels will be released, with the US releasing 30-40 million. However, this massive amount of oil is unlikely to reverse the strong uptrend of Brent and WTI.

Price trajectory of major oil brands

Being only a politician, Joe Biden cannot force US oil companies to raise production, let alone Saudi Arabia and other OPEC+ countries. Global demand for oil must fall in order to change the situation in the market, which is highly unlikely. The world's economy has barely managed to get over the COVID-19 pandemic.

According to a revised outlook by Goldman Sachs, the average price of Brent will reach $115 per barrel in 2022, up from $95 in the original outlook, and could rise even higher in the future. Negotiations between Russia and Ukraine failed to produce any results – both parties have diametrically opposite positions. The war is likely to drag on, meaning more issues with oil and natural gas supply and a stronger position for Brent and WTI bulls.

Investors are wary of potential Russian retaliation – Moscow could limit supply in response to sanctions, pushing prices up even higher. According to the International Energy Agency, Russia produced about 11.3 million barrels per day in January.

On the technical side, Brent's uptrend is very strong. The North Sea brand is pushing towards $108 per barrel, and it is very likely to reach it without facing any obstacles. Traders were previously recommended to open long positions - they could be expanded if Brent tests the resistance at $102 and $104, or if it bounces off support at $98.3 and $97.5.

Brent, daily chart