Connect with us

Hi, what are you looking for?

Economy

EU ban on Russian oil can boost crude oil prices to $150/barrel

In 2023, BoA sees oil demand approaching pre-Covid levels—but only if Russia’s crude oil and condensate production stays at 10 million bpd and OPEC+’s crude oil output increases.

International economists believe that the international crude oil prices would soon hit the record breaking level of $150 per barrel in coming weeks in the backdrop of European Union (EU) decision to ban oil imports from Russia.

As the EU announced its decision on May 31, the international crude oil prices witnessed growth the same day. For example, the Brent crude surged to above $117/barrel while OPEC oil crossed $120/barrel on June 1, 2022.

All other crude oil brands have recorded increase in their market value soon after the EU announced ban on Russian oil imports.

“With our $120/bbl Brent target now insight, we believe that a sharp contraction in Russian oil exports could trigger a full-blown 1980s style oil crisis and push Brent well past $150/bbl,” an analyst working with Bank of America said.

Bank of America’s head of global commodities and derivatives research Francisco Blanch warned of a global recession like 2008 because of very high oil prices.

PAKISTAN-THEME-OIL

“Can the global economy continue to expand with tightening oil supplies? Our estimates suggest that the world can handle a total disruption of just about 2mn b/d of Russian oil without risking a global recession,” Blanch cautioned.

In 2023, BoA sees oil demand approaching pre-Covid levels—but only if Russia’s crude oil and condensate production stays at 10 million bpd (barrel per day) and OPEC+’s crude oil output increases.

Blanch stressed that while recession risks were elevated, it was not the base case. Blanch’s prediction, however, was made prior to the EU’s deal that it recently struck to embargo 90% of the crude oil that it currently gets from Russia starting the end of this year.

Crude Oil, Cooking Oil, Fossil Fuel, Garbage, Oil Drum

Some industry experts expect the partial EU ban on Russian imports to send oil prices to above $130 a barrel in the short term.

GDP has typically been measured by looking at the number of cars sold or air travel. But, Blanch says, “No major economy can expand without energy. Whether the source of this energy is thermal or renewable matters less, in our view, as long as it is available.”

Blanch also said that while the U.S. is unlikely to fall into a recession due to high energy prices, other countries may be more at risk.

Avatar photo
Written By

I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.

Art & Culture

KARACHI: The afternoon of 20th April was selected to honor those women artists who need to be promoted for their dedication to Art. The...

Art & Culture

KARACHI: With the onset of spring in Karachi, Mariam Maaz show heralds a new dawn in the Art-scape and is a breather of fresh...

International

Reports from local media in Sydney, Australia, recounted a harrowing incident during a sermon on Monday, where a bishop and several others were stabbed....

Entertainment

SEOUL: Daud Kim, a Muslim K-pop sensation, excitedly shared news with his followers and revealed his plan to construct a mosque on a plot...