The price of oil could reach as much as $240 per barrel, or nearly double the current levels, if Western nations follow the US in targeting Russian energy with sanctions, Norway-based Rystad Energy researchers have warned.
“If more Western countries join the United States in imposing an oil embargo on Russia, this will leave a 4.3 million barrels per day hole in the market that simply cannot be quickly replaced from other sources of supply,” the analysts said in a statement on Wednesday.
“If Russia’s oil exports of 4.3 million barrels are stopped by the West by April 2022, and China and India do not change their import volumes, then the price of Brent oil will jump to $240 per barrel by the summer of 2022,” they predict, warning that it could cause the biggest shortage in oil supplies since the 1990 Gulf War, when oil prices doubled. Their price prediction would nearly double the all-time high oil reached back in July 2008, when crude cost $147.27 per barrel.
According to analysts, countermeasures to increase supply and balance the market would be required, but it may take several months to implement them.
Also, if oil prices spike as high as they predict, Rystad experts say “chances are high that the global economy will enter a recession as early as the fourth quarter of 2022.”
Global benchmark Brent crude exceeded $130 per barrel on Wednesday, after breaching this threshold earlier on Monday for the first time in 14 years and spiking to $139 per barrel. The rally subsided by 15:00 GMT, however, with Brent trading at $122 per barrel and US benchmark West Texas Intermediate (WTI) around $118 per barrel.
The rise in oil prices started last month when a number of Western states imposed sanctions on Russia after the country launched a military operation in Ukraine. In the most recent development, Washington on Tuesday announced it will ban Russian oil exports to the US. Market players fear US allies might impose similar restrictions over the coming days.
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