The price of oil has continued to rise this week. Brent crude briefly surpassing $100 per barrel the very first time since 2014, as Russia declared war on Ukraine even though prices slowed down a bit on Friday experts have warned that they could go up to more than $130 as a result of the war.
Oil prices are sitting near seven-year highs after the two-month run, fueled by fears that the ongoing tensions in Ukraine Russia and Ukraine will cause severe disruptions to supply in the world.
As Russia announced the attack on Ukraine this week, the price of European benchmark Brent crude spiked to $105 per barrel, up 47% since the 20th of December up to its highest level since July 2014. U.S. benchmark West Texas Intermediate crude surged 47% over the same period to reach $100 per barrel–with analysts already advising that prices could climb even higher.
Prices for oil could reach $125 per barrel by this summer according to a note from Goldman Sachs analysts on Friday They predict that the Ukraine-Russia conflict as well as “uncertainty regarding sanctions that could be imposed,” could create a “supply shock” on the world energy markets, which are already limited in supply.
The conflict is set to disrupt global supplies, Brent crude prices could “approach $130 per barrel by June” and that estimate “could soar higher if additional disturbances occur,” Louise Dickson, senior oil market analyst at Rystad Energy, makes the same argument in a recent paper.
JPMorgan recently predicted that the event that Russian natural gas and oil exports fall as a consequence of the conflict, Brent crude could reach $115 per barrel in the first quarter of 2022 then dropping to less than $100 at the end of the year.
Prices for oil were somewhat lower on Friday, but in large part because the United States and other Western allies have avoided threatening Russia with severe sanctions against energy due to the fact that Russia is the second largest oil producer as well as a major natural gas producer for Europe.
“I do not want to claim that it’s not but it really depends,” says Simon Wong Research analyst at Gabelli Funds. “Will both the U.S. and Europe sanction Russian oil? Will there be a coordinated strategic petroleum reserve release of the U.S. and IEA if they the sanction?” If Russian energy markets are sanctioned in the West, and there is no coordinated strategic releases of reserve reserves from the U.S. and its allies, “then $150 oil or even more is not an out of the realm of possibility,” he says.
“The oil market remains very tight and will likely witness a wildly fluctuating market when energy traders wait for the outcome for as well Russian as well as Iranian crude oil supplies,” says Edward Moya who believes the price of oil could climb to as much as $120 per barrel over the coming weeks.
The traders have also kept the latest developments in the possibility of a possible nuclear deal between the United States and Iran. If a deal is signed and signed, it could mean more oil back to global markets, with Iran being estimated to have around 80 million barrels of oil reserves. Even though JPMorgan analysts predict a decline in Russian energy exports due to the intensifying conflict with Ukraine However, they are also of the opinion that the possibility of an Iran deal will come to realization, which would be a way to offset the loss of supplies. Under this best-case scenario, they see Brent crude trading at around $110 per barrel for the second quarter before falling to $90 by the close of 2022.
