Oil Prices Could Surge to $150 a Barrel and Gasoline Become Even More Expensive If Russian Crude Oil Exports Are Affected by Tensions With Ukraine

Tension Between Russia and Ukraine Represents Risk to Global Oil and Natural Gas Market, as Russia Is the Second Largest Producer in the World, Only Behind the United States

According to projections by JPMorgan, oil prices could soar to US$ 150 per barrel if Russian crude oil exports are affected by tensions with Ukraine. An energy expert also assures that if there were a war between Russia and Ukraine, gas and oil prices would skyrocket. A barrel of oil would exceed US$ 100, and in the United States, a gallon of gasoline could reach US$ 4.

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JPMorgan emphasizes how a potential invasion of Ukraine would cause widespread ripple effects, which would be felt by inflation-weary consumers worldwide. “Any disruptions in oil flows from Russia, in a context of low unused capacity in other regions, could easily send oil prices to US$ 120,” wrote Natasha Kaneva, head of global commodities strategy at JPMorgan, in a report published at the end of last Tuesday.

Peak of US$ 91 in the price of oil per barrel, which reached a new seven-year high last Wednesday, would further increase fuel prices at the pump.

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JPMorgan warned that if Russian oil exports are cut in half, Brent oil prices would likely surge to US$ 150 per barrel. The highest all-time price for oil was established in July 2008, when Brent soared to a record US$ 147.50 per barrel.

Russia-Ukraine Tensions Have Helped Inflate Oil Prices Worldwide in Recent Weeks

The Russia-Ukraine tensions have helped inflate oil prices in recent weeks. Brent crude oil hit a fresh seven-year high of US$ 94 per barrel on Monday, although it has since retreated to US$ 91.

Russia is the second-largest producer of oil and natural gas, only behind the United States in each category. The country plays a key role in OPEC+, the group of producers that has only gradually added back production that was sidelined during the early days of Covid. The Russia-Ukraine crisis presents several risks to the oil market.

First, such a conflict could potentially harm energy infrastructure in the region. Second, Western powers might seek to punish Russia by imposing sanctions that affect the country’s energy exports, although US authorities have signaled a preference for penalizing other sectors of its economy first.

And then there is the risk that Russian President Vladimir Putin would retaliate by weaponizing oil and natural gas exports. Higher natural gas prices in Europe would increase demand for oil as factories and power plants shifted to oil.

Russia is also the top producer of natural gas — and its largest customer is Europe, which is already dealing with very high domestic heating costs. “Any disruption in exports from either of the main pipelines could put Europe’s natural gas balance in a precarious position, especially considering that 2022 began with record gas inventory levels in Europe,” JPMorgan warned.