International oil prices are expected to soar to $120 a barrel if crude oil exports are suspended due to worsening tensions between Russia and Ukraine, according to a report. JP Morgan made the announcement on the 9th (local time).
Natasha Kanneva, head of JPMorgan’s global product strategy, warned, “If supply from Russia is disrupted at a time when oil supply capacity in other regions is low, oil prices could soar to $120.”
Tensions between Russia and Ukraine have fueled rising oil prices in recent weeks. Brent oil prices rose to $94, the highest level in seven years, on the 7th. Then, it retreated to the $91 level due to optimistic prospects for renegotiations to restore Iran’s nuclear agreement (JCPOA).
JP Morgan also warned that if Russian crude oil exports are halved, Brent oil prices are likely to soar to $150 a barrel. The previous high was $147.50 in July 2008.
Russia ranks second in the world as an oil and natural gas producer. After the COVID-19 pandemic, it has played an important role in OPEC Plus, a group of oil-exporting countries (OPEC) and oil-
JP Morgan said the Russian and Ukrainian incidents pose various risks to the oil market.
European countries, including the United States, are signaling strong sanctions if Russia invades Ukraine, on the contrary, Russia could weaponize energy exports such as oil and natural gas.
Concerns have also been raised that conflicts between the two countries could potentially damage energy infrastructure in the region.
In addition, Russia is leading natural gas production and has the largest customer in Europe. Europe is already struggling with high home heating costs.
JP Morgan added, “In particular, given that Europe’s gas inventory began at an all-time low this year, if exports of major pipelines are disrupted, Europe’s natural gas supply and demand balance could be at stake.”
