By Yuka Obayashi

TOKYO, Reuters – Oil prices rose on Tuesday. They traded at seven-year highs last week. Investors bet that supplies will remain tight with a modest production increase by the major oil producers.

April delivery at 0850 GMT was up 0.2%, at 14 cents per barrel.

Monday’s expiration of the front-month March delivery contract was $91.21 per barrel. This is an increase of 1.3%.

U.S. West Texas Intermediate crude gained 0.2% or 13 cents to $88.28/barrel after having gained 1.5% over the prior day.

These benchmarks reached $91.70 (and $88.84) on Friday. Due to a shortage of supplies and geopolitical tensions between the Middle East and Eastern Europe, they have experienced a significant increase of 17% since January 2014. This was the highest monthly gain since February 2021.

Hiroyuki Kakuawa, Nissan’s general manager for research, stated that “the market is keeping a bullish tone because supply tightness is expected to continue as demand continues to pick up with receding concerns over Omicron coronavirus type.”

“All eyes will be on OPEC+ as well as the development of conflict between Russia and West over Ukraine,” he stated, predicting that WTI would soon reach $90 a gallon.

Market analysts and Reuters sources expect OPEC+ (which includes the Organization of the Petroleum Exporting Countries, and its allies, led by Russia) to continue with its policy of gradually increasing production when it meets Wednesday.

Reuters found Monday that OPEC’s January oil output fell below the increase planned in a deal with its allies. The survey was based on a Reuters survey. It highlights producers’ struggles to pump more, even when prices are high.

Oil prices were also affected by tensions between Russia, the West and China. Russia is the second largest oil producer in the world. The West and Russia have clashed over Ukraine. This has led to fears about disruption of energy supply to Europe.

Washington and London declared Monday that they are ready to penalize Russian elites who were close to Vladimir Putin. They will also impose travel bans on those who enter Ukraine.

Geopolitical disruptions of oil supplies at a time when already low inventories have sent the price premium for barrels of prompt delivery skyrocketing, suggesting that the current price rally is still on the horizon.