Russia warns oil price could reach 300 USD/barrel

Unlike the US market, in the European market, oil of Russia is accounting for 25% of the market share. So if the ban is enacted, where will the oil price story go?

Oil prices continued to increase when the tension between Russia and Ukraine showed no signs of cooling down, and Europe considered banning Russian oil exports. Oil price “storm” is forming ahead.

Oil prices continued to increase when the tension between Russia and Ukraine showed no signs of cooling down. (Illustration image – Photo: istock)

Marketwatch quoted Russian Deputy Prime Minister Alexander Novak as warning that oil prices could even reach $300 per barrel if the world turns its back on supply from Russia.

Michael Lynch, president at the Center for Economic and Energy Research in the US, said that even if Russia found a new replacement partner, the lost oil could hardly be bought up. Oil prices will certainly continue to rise and a price of 150 USD / barrel is likely to happen in a few weeks.

The Barrons website quoted JPMorgan’s forecast that North Sea Brent oil could rise to $185/barrel which is not surprising.

According to the article, one side is banned supply, the other side is still increasing demand, causing the price of European benchmark Brent oil to increase by nearly 80% in value in just 52 weeks. If the supply scenario from Russia is completely banned, Brent oil can end 2022 at $185/barrel.

According to American newspapers, the energy industry is contributing one fifth to Russia’s economic growth, of which half of Russia’s crude oil is exported to the European market. However, it also means that, to cut off oil from Russia, Europe must have an urgent large alternative.

Any scenario that reduces supply from the world’s top oil exporter, Russia, will have a huge impact on already tight global markets, Bloomberg said. Supply maps show that most eastern European countries depend on half of their oil imports from Russia. So are the six refineries across the continent. In addition, there are other by-products such as hydrocarbon mixtures, raw oil, etc.

As for Russia, when pipelines to Europe are halted, its oil barrels will have to travel longer distances from the Baltic and Black seas through Europe to reach Asia.

The Wall Street Journal assessed that the EU embargo not only caused supply difficulties for Europe, but also for the global market. The ban could take 3 million barrels a day of oil off the global market, analysts say. This market is inherently “tight” with only about 100 million barrels a day to consume.

Two weeks ago, the US banned oil imports from Russia even though the market share was only 8%. However, despite opening oil reserves, the US WTI oil price has not shown any signs of cooling down. And consumer gasoline is forecast to exceed the average price of 5 USD/gallons, a high price, most recently during the 2008 crisis.

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