Peter Nurse   

Investing.com — The oil market was up Monday due to increased geopolitical tensions and continued shortages. 

Futures were trading 0.6% higher at $87.33 per barrel by 9:35 ET (135 GMT) while contract prices rose 0.6% to $89.06. These benchmarks have reached their highest point since Friday October 14, 2014. Contracts rose 0.6% to $89.06. 

U.S. The price of gasoline RBOB Futures was up 1.1% to $2.5655 per gallon.

On Monday, the U.N. Security Council meets to discuss Russia’s troops building up on Ukraine’s border. Russia being one of the member countries that hold a veto means there won’t be any actions.

Russia and the West have been in dispute over Moscow’s intentions for Ukraine for a number of weeks, a fact that is boosting the crude market given Russia could disrupt its supplies to Europe should the situation turn violent and the West levies sanctions.

The United Arab Emirates claimed it intercepted the ballistic missile launched by Yemen’s Houthi. This was in addition to the general supply risk premia.

This positive tone is likely to continue ahead of Wednesday’s meeting of the Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, to discuss future output levels.

The group is expected to stick with its strategy of a cautious increase of 400,000  barrels a day in output quotas per month, a stance it has taken since August last year, even as a number of members have struggled to fulfil their quotas. Given the recovery from the pandemic, tight inventory levels have been a result.

A weekly report from also indicated that U.S. drilling companies continued to build oil rigs at an equivocal pace, in spite of the tight supply and increased prices. This shows how economic incentives are being created to encourage production. 

The U.S. added four oil rigs over the last week, while another two rigs were added for gas exploration, taking the total rig count (oil & gas combined) to 610 for the week ended Jan. 28. “still significantly below pre-Covid levels of around 683, even as NYMEX WTI trades comfortably above pre-Covid price levels,” ING said, in a note.