E-Paper
Sign In
Mon, Nov 25, 2024 | Jumada al-Awwal 23, 1446 | DXB
0°C
Russia-Ukraine crisis: Oil price soars past $105 amid fears of supply disruptions
Brent crude futures rose more than 8.9 per cent to trade at $105.36 a barrel at around 10:40am London time. US West Texas Intermediate futures, meanwhile, climbed over 8.7 per cent to trade at $100.10
Goldman Sachs said in a report that the impact on energy prices should be limited. Europe gets nearly a third of its oil and around 40 per cent of its gas from Russia, much of it flowing through pipelines across Ukrainian territory. — File photo
Oil prices on Thursday surpassed $100 a barrel for the first time since 2014 following the invasion of Ukraine, which analysts fear will have far-reaching implications for the global economy, particularly given Russia’s role as the leading producer of natural gas and oil.
Brent crude futures rose more than 8.9 per cent to trade at $105.36 a barrel at around 10:40am London time. US West Texas Intermediate futures, meanwhile, climbed over 8.7 per cent to trade at $100.10. Natural gas prices popped 6.1 per cent.
Europe gets nearly a third of its oil and around 40 per cent of its gas from Russia, much of it flowing through pipelines across Ukrainian territory.
Analysts said supplies from Russia do not appear to have been affected - yet. But the fear that they will be, and that there could be a scramble for other resources, is pushing up costs.
ALSO READ:
“While Western governments probably will exempt energy transactions from sanctions, the blizzard of new restrictions will force many traders to be exceedingly cautious in handling Russian barrels,” analysts at political risk consultancy Eurasia Group said.
“Gas transiting Ukraine will likely be disrupted, affecting supplies to several central and eastern European countries, and raising gas prices in Europe,” they added.
Troy Vincent, a senior market analyst at researcher DTN Markets, said there are simply no alternatives to Russian volumes of oil and gas “that do not entail far higher prices and potentially the development of severe shortages.”
“Sanctions on Russian oil and gas would mean higher energy prices the world over,” Vincent said but noted that China’s pipeline infrastructure linking it with Russia and Beijing’s willingness to ignore US sanctions put the country in a unique position.
“China is likely the only major nation globally that could benefit from such sanctions, as they would likely increasingly soak up discounted Russian volumes,” Vincent said.
Matthew Smith, a lead oil analyst for the Americas at Kpler, said there may not be an immediate disruption to supply despite Russia’s attack.
Europe and Russia are very interconnected when it comes to energy, and each side is reliant on the other. The US and the West will probably not impose sanctions specifically on energy flows, Smith said.
“We’re not likely to see the supply side of things interrupted, even though everything else is escalating,” he said.
In addition to tight supplies, there’s also uncertainty about sanctions from President Joe Biden’s administration, said Ellen Wald, president of Transversal Consulting.
“Will they sanction Russian oil and gas? Because this would mean significant pain for even US consumers. The United States does import Russian oil. In fact, there’s oil headed to the US as we speak,” Wald said.
Goldman Sachs said in a report that the impact on energy prices should be limited. “While Europe imports a large share of its natural gas consumption from Russia, the US is a net exporter of natural gas and any spillover effects on US gas prices should be modest,” analysts at the Wall Street bank said.
“Our commodities strategists also expect only a modest impact on oil prices, though they see the risks as skewed to the upside because the oil market is already tight.”
— issacjohn@khaleejtimes.com
Sign Up For Breaking News Alerts
Be in the know. Get the latest breaking news delivered straight to your inbox.
Next Story