The specter of a Russian invasion of Ukraine and the possible sanctions on Moscow are pushing crude prices up.
The market seems to be in a panic mode as it would be difficult to make up for the missing Russian barrels in the case of sanctions.
This is the supply scenario.
At its peak, the backwardation in the futures market was so steep that the Brent M1-M2 spread surpassed $2 per barrel.
Meanwhile, strong crude demand in the physical market also lent support.
Concurrently, refinery runs are to pick up amid strong refining margins, dwindling product stocks, and as China looks to mitigate the risk of a supply shortage, even as product export quotas remain limited.
It is worth mentioning that inflationary pressures and high debts impact economic and oil demand growth negatively.