Russia’s Invasion Of Ukraine

The price of oil has continued to climb this week, with Brent crude briefly soaring above 100 cents per barrel, for the first time in 2014, as Russia began its war against Ukraine Although prices slowed down a bit on Friday however, experts warn that they could reach more than $130 due to the aftermath of the war.

KEY FACTS:

Prices for oil are close to seven-year highs following an upswing of two months amid concerns that the growing tensions that is raging between Russia and Ukraine could cause major disruptions to supply in the world.

As Russia began the assault on Ukraine this week The price of European benchmark Brent crude jumped to $105 per barrel, up 47% from December 20 to the highest since July 2014. Meanwhile, the U.S. benchmark West Texas Intermediate crude jumped 47% in the same time period, reaching $100 per barrel. Analysts are today predicting that prices will increase even more.

Prices for oil could reach $125 per barrel by the end of this summer according to a report by Goldman Sachs analysts on Friday they predict that the conflict between Russia and Ukraine, along with “uncertainty regarding sanctions that could be imposed,” could create a “supply shock” in the global energy market that are already at a minimum supply.

The conflict is set to threaten global supply, Brent crude prices could “approach $130 per barrel by the end of June” and that figure “could rise if further disturbances occur,” Louise Dickson, senior oil market analyst at Rystad Energy, also argues in a recent report.

JPMorgan has recently forecast that, the event that Russian natural gas and oil exports decrease as a result of the war, Brent crude could reach $115 per barrel in the 2nd quarter in 2022, before dropping back to below $100 by the end the year.

The prices of oil slowed slightly on Friday, but mostly due to the fact that the United States and other Western allies have so far not been able to confront Russia with harsh sanctions on energy since Russia is the second largest oil producer, and also a major natural gas supplier for Europe.

CRUCIAL QUOTE:

“I do not want to make it sound like it’s a matter of opinion however it depends,” says Simon Wong Research analyst at Gabelli Funds. “Will both the U.S. and Europe sanction Russian oil? Are there plans for an agreed-upon strategic petroleum reserve release from the U.S. and IEA if they do sanctions?” If Russian energy markets are sanctioned by West and there is no coordinated strategic reserve release by the U.S. and its allies, “then $150 oil or more isn’t impossible,” he says.

TANGENT:

“The market for oil is extremely tight and is likely to be prone to wild swings as traders in the energy sector wait for results regarding the both Russian as well as Iranian crude oil supplies,” says Edward Moya who believes that oil prices could go up to up to $120 per barrel over the coming weeks.

WHAT TO WATCH FOR:

The traders have also kept the latest developments in the possibility of a nuclear agreement with the United States and Iran. If a deal is signed and signed, it could mean more oil to the global markets and Iran being estimated to have around eight million barrels oil reserves. Although JPMorgan analysts anticipate a drop in Russian exports of energy due to the growing conflict with Ukraine They also believe there is a chance that an Iran agreement will come to realization, which would aid in regaining supplies. In the best case scenario they anticipate Brent crude at $110 per barrel during the second quarter, and then falling to $90 at the year’s end in 2022.

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