Brent crude hit a high of over $105 per barrel last week for the first time since 2014, while WTI climbed to almost $102 per barrel, amid fears that the war between Russia and Ukraine would disrupt global oil and natural gas supplies. Russia is the world’s second-largest oil exporter after Saudi Arabia, shipping around 5 million barrels of crude oil per day, approximately half of which goes to the Eurozone. A disruption in the distribution of oil from Russia would create an energy crisis, pushing oil prices to even higher levels.
Brent crude price shot past the $100 per barrel key level on Monday and WTI price went up to $98 per barrel, boosted by the announcement of heavy sanctions against Russia. The ascend of oil prices was checked somewhat, as western sanctions avoided targeting the sensitive energy sector as much as possible. WTI is trading in an uptrend, but in case the uptrend is reversed, support may be found near $88.5 per barrel and further down around $82.4 per barrel.
Sanctions against Russia are expected to push the price of oil even higher, even though the US and the EU have so far avoided imposing direct sanctions on Russia’s gas and oil exports. Germany however, has suspended the approval of the Nord Stream 2 pipeline, a move which may cause an energy crisis in Europe, which depends on Russia for approximately 40% of its gas and send the prices of energy-related assets even higher.
The price of oil has been increasing over the past months, as existing international inventories are tight and supply is trying to catch up with rising demand. It has been reported that Iran could add 900,000 barrels a day if a deal with the US is struck over its nuclear program, which might help to alleviate the energy crisis somewhat.
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