Russia’s Invasion Of Ukraine Has Sent Energy Prices Soaring—Here’s How High Oil Could Rise

Oil prices have continued to rocket upwards this week. Brent crude briefly surpassing $100 per barrel for the first time since the year 2014–as Russia declared war on Ukraine, and although prices moderated somewhat Friday, experts warn that it could go up to more than $130 as a result of the war.

KEY FACTS

Oil prices are sitting close to seven-year highs following two months of a rally, amid worries that the growing conflict with Russia and Ukraine could trigger severe disruptions to global supply.

As Russia began its invasion of Ukraine this week, the price of European benchmark Brent crude shot up to $105 per barrel – up 47% from the end of December up to its highest level since July 2014. Meanwhile, the U.S. benchmark West Texas Intermediate crude jumped 47% in the same period , reaching $100 per barrel. Analysts are already advising that prices could climb even higher.

Oil prices could be as high as $125 per barrel this summer, according to a note issued by Goldman Sachs analysts on Friday they predict that the Russian-Ukraine conflict along with “uncertainty about sanctions in the future,” could create a “supply shock” in the global energy market which are currently at a minimum supply.

The conflict is set to disrupt global supplies, Brent crude prices could “approach $130 per barrel by June” and that number “could be higher if other interruptions happen,” Louise Dickson, senior oil market analyst at Rystad Energy, also argues in a note from a few months ago.

JPMorgan recently predicted that if Russian oil and natural gas exports decline as a result from the conflict Brent crude could reach $115 per barrel over the first quarter of 2022 before falling back below $100 by the close of the year.

Oil prices slowed somewhat 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 tough energy sanctions due to the fact that it is the world’s second largest oil producer and a major natural gas provider for Europe.

CRUCIAL QUOTE:

“I do not want to make it sound like it’s a matter of opinion however it does depend,” says Simon Wong Research analyst at Gabelli Funds. “Will you see the U.S. and Europe sanction Russian oil? Is there a coordinated reserve of strategic petroleum publication by U.S. and IEA if they do the sanction?” If Russian energy markets are sanctioned by the West and there is no coordinated releases of reserve reserves from the U.S. and its allies, “then $150 oil or even more is not out of the question,” he says.

TANGENT:

“The oil market is extremely tight and could be prone to wild swings as energy traders wait for outcomes for the both Russian and Iranian crude supply,” says Edward Moya He believes that oil prices could rise to as much as $120 per barrel within the coming weeks.

WHAT TO WATCH FOR:

The traders have also kept the latest developments in the possibility of a possible nuclear deal that could be reached between United States and Iran. If an agreement is reached, that could bring more oil back to global markets and Iran believed to hold around 80 million barrels of oil reserves. Although JPMorgan analysts anticipate a drop in Russian energy exports due to the increasing conflict with Ukraine, they also think an Iran deal could come into the table, which will be a way to offset the loss of supplies. Under this best-case scenario they expect Brent crude averaging $110 a barrel during the second quarter before falling to $90 at the date of 2022’s expiration.