US-Russia Escalation Over Ukraine Could Propel Oil Prices Up to $100, Analysts Say
14:19 GMT 03.02.2022 (Updated: 13:28 GMT 06.08.2022)
© AFP 2023 / BRANDON BELL
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Oil markets have been shaken recently by the tensions between Russia and the United States over the situation in Ukraine. The West accuses Moscow of "amassing troops" on the border with Ukraine and allegedly preparing an "invasion" – something the Kremlin denies.
In the event of tensions between Washington and Moscow over Ukraine boiling over, oil prices could rise up to $100 per barrel, given that both Russia and the United States are among the biggest world producers of oil, oil historian Daniel Yergin told Bloomberg.
According to Yergin, further escalation could trigger “a panicky reaction in the market."
“Oil and gas production in the United States is a great geopolitical asset," he said, explaining that American shale drillers have been ramping up output – something that serves as a great stabiliser in the market.
Yergin is not the only one giving grim predictions for oil prices if the Ukraine situation gets worse.
RBC Head of Global Commodities Strategy Helima Croft said, cited by CNBC, that the markets could be impacted even by a high risk of Russian "invasion," given "the stakes involved."
“What I do know is if those tanks cross the border, oil will go above $100 dollars a barrel,” Croft said. “We’ll certainly feel it on the European gas market. We’ll feel it on the wheat market. We’ll feel it across a variety of markets. Russia is not a one-trick pony.”
Concerns in the West continue even though Russia has repeatedly underlined that it does not pose any threat to Ukraine. Moscow has also dismissed the "invasion" claims, pointing instead at the fact that NATO and the US have amassed troops and weapons in Eastern Europe. The Kremlin explained that this has triggered concerns in Moscow – as a result, it rolled out some security proposals to the Western countries, particularly demanding legal guarantees from NATO that it will not expand eastwards and deploy offensive weapons in Eastern Europe.
US Assistant Treasury Secretary for Economic Policy Benjamin Harris earlier voiced concerns in regard to how geopolitics could affect the global efforts to stabilise energy prices, already shaken by the aftermath of the coronavirus pandemic.
"Currently, it is expected that energy prices will stabilise in 2022, but geopolitical instability could result in higher energy prices," Harris said on Monday.
The situation over Ukraine has hit oil markets over the past six weeks, with global oil prices increasing by 14 percent in January for the largest monthly gain since last February. Aside from this, oil prices have been on the rise in late 2020 due to the coronavirus, prompting a separate drama in OPEC+ group, with its members having hard time about deciding on output cuts.
