Brent crude prices could easily break above $100 per barrel again if losses of supply from Russia are close to 3 million barrels per day (bpd) when the EU embargo on Russian crude imports by sea enters into force next month, the Riyadh-based International Energy Forum (IEF) thinks.
The IEF and many consuming countries, not only the United States, are concerned about what will happen to the oil market when the EU sanctions kick in, Joseph McMonigle, secretary general of the IEF, told Bloomberg TV in an interview on the sidelines of the ADIPEC energy conference in Abu Dhabi.
According to the IEF, the world’s largest international organization of energy ministers, the oil market could lose anywhere between 1 million bpd and 3 million bpd of oil supply from Russia when the sanctions take effect.
In recent months, there have been many predictions and a lot of speculation about what might happen with the embargo, but “This is when you’ll actually see Russian barrels come off the market,” IEF’s McMonigle told Bloomberg.
“Maybe Russia will figure a way around it, but not at first,” McMonigle added.
If 3 million bpd of Russian oil is lost, Brent Crude will easily break $100 a barrel, he said.
There will be a lot of volatility as the embargo begins because there will not be much transparency about the actual number of Russian barrels coming off the market, according to McMonigle.
So Brent prices could go “well above $100” with a lot of volatility, which is not good for the market, he said.
Early on Tuesday, Brent was up by 2% at $94.74 as of 8:55 a.m. ET as the U.S. dollar weakened today.
Commenting on the current market situation, McMonigle told Bloomberg, “The physical markets are very tight. The paper markets are pricing in bad economic news and a recession.”
By Tsvetana Paraskova for Oilprice.com