London, 24 February 2022 (TDI): Brent oil price surged $105/b for the first time since 2014 as Russia attacked different spots across Ukraine, causing fears of a disturbance to energy exports at a period of already tight supplies.
Brent oil prices climbed more than 9% after President Vladimir Putin ordered Russian soldiers into Ukraine. President Volodymyr Zelenskyy announced a nationwide emergency in the country, while United States President, Joe Biden said he would impose “severe sanctions” on Moscow.
Natural gas prices in the European region rose as much as 41% while food prices and other metals including gold, copper, aluminum, and nickel piled on the inflationary burden.
Russia is a key supplier of merchandise to regional and worldwide customers, while Europe relies on the state for about a quarter of its oil and a 3rd of its gas.
The escalation has alarmed the market that was already under pressure as oil supplies around the globe fail to retain pace with a vital retrieval in demand as the Covid-19 Pandemic recedes.
The Organization of the Petroleum Exporting Countries (OPEC) alliance, led by Russia and Saudi Arabia, is stressed to reestablish production hurriedly sufficient to sponsor some of the biggest markets players to warn of higher oil prices.
The Ukraine armed conflict has also increased another dimension to the Organization of the Petroleum Exporting Countries coalition’s tense politics.
A tight market and military conflict in Europe is a strong mixture. Oil prices could settle as high as $140/b in a worst-case situation where energy flows are disturbed, according to experts at Capital Economics.
As soon as the report of the Russian attack surfaced the market became unpredictable. Even now the situation is unpredictable.
The world economy has not been able to recover from the onslaught of the Covid-19 pandemic. This latest development is likely to deteriorate the situation.
