Oil prices have been supported with supplies tightening due to output cuts from the OPEC+. Credit: Terry McGraw from Pixabay

Oil prices reached their highest in 13 months due to fears of tensions in the Middle East, which prompted buying, while hopes that a US stimulus and easing of stringent lockdowns have added further support.

Brent crude grew by $1.09, or 1.8%, at $63.52 a barrel at 0428 GMT, the highest since 22 January 2020, while US West Texas Intermediate (WTI) crude futures increased by $1.28, or 2.2%, to $60.75 a barrel, the highest since 8 January 2020, reported Reuters.

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The Saudi Arabia-led coalition, which is combating a conflict in Yemen, stated on Sunday that it destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom. This has raised concerns of heightened tensions in the Middle East region.

Commodities broker Fujitomi Co chief analyst Kazuhiko Saito was quoted by the news agency as saying: “An early spike in oil markets was triggered by the news. But the rally was also driven by growing hopes that a US stimulus and easing of lockdowns will boost the economy and fuel demand.”

US President Joe Biden pushed for a key legislative achievement last Friday, turning to a bipartisan group of officials for help on his $1.9tn Covid-19 relief package.

Furthermore, oil prices have been supported with supplies tightening due to output cuts from the OPEC+.

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Successful vaccine rollouts to combat Covid-19 across the world also raise hopes of a rapid economic recovery.

Rakuten Securities commodity analyst Satoru Yoshida said: “With cheap money supply amid monetary easing worldwide, a swift rollout of the vaccine and tight supply from OPEC+ and US shale oil producers, crude oil prices may be headed toward $70 a barrel.”