As the threat of Russia’s invasion of Ukraine grows, there are concerns that international crude oil production will not be sufficient to ease the impact of Russia’s suspension of energy exports in case of an emergency.
According to Bloomberg News, West Texas Intermediate (WTI) rose 1% to $94.05 a barrel on the New York Commercial Exchange, continuing its recent upward trend. Whenever news of the Ukrainian crisis is delivered, it seems to be getting closer to $100 a barrel.
The Wall Street Journal (WSJ) reported that even if oil demand increased as the global economy slowly recovered from the pandemic, there was little impact on the crude oil market in the market, but if Russia, the world’s third-largest oil producer, disrupt energy exports with Ukraine, the balance of supply and demand could be jeopardized.
According to investment bank Cowen, Russia’s daily crude oil production is about 5 million barrels, accounting for 12% of the world’s daily crude oil production. In addition, oil-related products are produced at 2.5 million barrels a day, with a global market share of 10%. In addition, 60% of Russian oil exports are supplied to Europe and 30% to China.
Concerns are rising that if Russian oil and natural gas, which account for such a large portion, disrupt the supply, it will further intensify inflation by causing a chain reaction, such as soaring energy product prices and rising prices of various consumer goods.
Andy Lipou, CEO of U.S. consulting firm Lipou Oil, pointed out, “The market is now questioning whether OPEC+ (the consultative body of oil-producing countries including oil exporters) will be able to restore production to the level before the pandemic,” adding to Saudi Arabia and the United Arab Emirates.
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