Oil could hit $130 a barrel as war in Ukraine rages on
A global energy crisis, which could see prices surge at the fuel pumps, looms as the threat of growing military conflict in Ukraine rises after Russian troops and tanks crossed its borders yesterday.
Rystad Energy CEO, Jarand Rystad, warned of a looming “global energy crisis” on Thursday as news broke of the rising threat of war in the country.
“The ever-brewing threat of military conflict in Eastern Europe reached a crescendo as Russian troops and tanks entered Ukraine.
“The tragedy of the situation cannot be underestimated, and other implications of the conflict pale compared with the potential human cost on both sides,” Rystad said.
“Full-scale military conflict between Russia and the West is unlikely, but a deep economic war is almost inevitable.
“Russia cannot win an outright economic war, but it does have a major weapon to wield – oil and gas exports.
“Demand for oil and gas in the West is only rising, and a global energy crisis is likely to unfold.”
He added that Russia’s actions had caught international commodity markets off guard, evidenced by the large price fluctuations witnessed on Thursday.
Already-strained markets had become further stretched as significant oil and gas volumes were now at risk.
“The escalation immediately jeopardises up to one million barrels per day of crude supplies that transit through Ukraine and the Black Sea, but the long-term disruptions could be far more significant.
Rystad Energy’s simulations show that oil prices could surge to around $130 per barrel, with consumers feeling the squeeze at the gas pump and in their power bills. The reality is that significantly higher prices are on the horizon in Europe and overseas,” Rystad said.
“A complete halt to gas exports from Russia is highly unlikely, but gas piped through Ukraine – which represents 8% of European supply – is very much at risk,” he said.
Russian gas accounted for more than 30% of Europe’s demand, and other potential supply sources were inadequately prepared to bridge the gap, said Rystad. Read more here