Oil prices rose, on Monday, to their highest levels since 2008, which brings to mind the crisis that the world witnessed that year and other previous crises, and raises fears of a new crisis that increases the inflationary trend that the world is already witnessing, as a result of the economic repercussions of the Covid-19 pandemic and a rise Demand for raw.
Jordanian energy expert, Amer Al-Shobaki, told Al-Hurra TV website that there is an increase in demand and a lack of supply due to the failure of oil-producing countries such as “OPEC” to reach the level of their production quotas. For example, there is a shortfall in the results of “OPEC Plus” regarding 900 thousand barrels.
This made the markets “sensitive to any additional variables”, such as geopolitical events such as the Russian invasion of Ukraine, and the study of opportunities for sanctions on Russian oil and gas, which is what is being talked regarding in the White House and Congress currently.
It also refers to a recent increase in prices due to the suspension of oil production from the El Sharara and El Feel fields in Libya as a result of sabotage acts, which led to a disruption of production at a rate of regarding 400,000 barrels.
Oil prices reached regarding $138 a barrel, on Monday, following a continuous series of recent hikes, before declining once more today, with a decrease in the pace of talk in the United States and Europe regarding a close ban on Russian oil exports, according to Al-Shobaki.
Simon Henderson, an energy expert and researcher at the Washington Institute, told Al-Hurra that the United States and Europe have not taken any official action in this regard, but the search is still underway for alternatives.
The possible Western embargo on Russian oil led to a significant rise in crude prices once more, amid concerns regarding supply in the market and reduced prospects for a quick return of Iranian crude to global markets.
In the first few minutes of trading, Brent crude reached $139.13 a barrel, and US West Texas Intermediate crude reached $130.50, its highest level since July 2008.
Gas prices also rose significantly, and its European price jumped 60 percent to more than 300 euros per megawatt-hour.
In the followingnoon GMT, prices fell once more, with Brent crude rising 6.3 percent to $125.55 a barrel, and West Texas Intermediate crude increasing 6.7 percent to $123.37.
And US Secretary of State, Anthony Blinken, announced, on Sunday, that the United States and European allies are discussing banning imports of Russian oil, while the White House is coordinating with congressional committees to move forward with this step.
Historical crises
The global interest in oil dates back to the Second World War, which depleted huge reserves of black gold in favor of military operations.
In the period following the war, several crises erupted that made oil an essential resource, especially in the United States.historyHe referred to several major crises in which oil played a major role, starting from the Suez Crisis in 1956 to the Iraqi invasion of Kuwait in 1990.
During the 1973 Arab-Israeli war, the Arab members of OPEC imposed ban The United States must respond to its decision to resupply the Israeli army, according to a report on the US State Department website.
This embargo led to a nearly fourfold increase in the price of a barrel of oil and caused “severe tension in the American economy, which has become increasingly dependent on foreign oil.”
This order paid To rationing gasoline and heating oil in some countries, such as the United States, residents are sometimes told not to use commercial lighting or Christmas lights and to sell gasoline at certain times.
With the outbreak of the Iranian revolution in 1979 and the country’s entry into a state of turmoil, oil production rates fell by regarding 4 percent, doubling the price of a barrel. Although oil production has resumed in Iran, it has remained erratic, and the Iran-Iraq war has led to a shortage of supply with a drop in production in both countries.
When Saddam Hussein invaded Kuwait in 1990, the price of oil doubled within a few months. Although rapid US intervention prevented a worst-case scenario, the retreating Iraqi forces pursued a scorched-earth policy, setting fire to Kuwait’s oil fields. These fires raged for several months, causing severe damage to Kuwaiti oil revenues, and raising prices around the world.
The mid-2000s saw more volatility in the oil market due to tensions in the Middle East, increased demand from emerging economies such as China, and growing concerns regarding shrinking oil reserves.
These fears were reflected in oil prices and reached their climax in July 2008 when the price of a barrel reached $147.30, rising nearly fivefold in five years, then the financial crisis and the subsequent recession, which led to a sharp drop in oil and gas prices from $133.88 to $39.09. In less than a year.
new crisis
A note issued by the National Australia Bank (NBA), on Monday, regarding the current high oil prices said that “if the war (on Ukraine) does not stop, nothing appears on the horizon that will slow down” the rise in oil prices.
“We view $125 a barrel, our near-term forecast for Brent, as a price ceiling, although prices might rise further if the turmoil worsens or lasts longer,” Giovanni Stonovo, commodities analyst at UBS, told Archyde.com.
Analysts at JPMorgan told AFP that oil might rise to $185 this year.
Russian oil.. and the search for alternatives
In an attempt to stop the war in Ukraine, the United States is considering Europe stopping Russian oil exports, but Russian exports amount to regarding seven million barrels per day, or 7 percent of global supplies. Although it is not currently subject to direct sanctions in theory, it has almost no one to buy it, which greatly affects global supply.
Simon says: “There is also tremendous uncertainty regarding what Russia will do, and it seems determined to continue with its plan despite the setbacks it experienced in Ukraine, and here the question remains: What can we do to stop Putin?”
وقال “Swiss Cote Bank Website” Imposing sanctions on Russian oil cuts will increase pressure on oil prices, which might raise the price of a barrel above $150 in the foreseeable future.
Analysts at Bank of America said that if most of Russia’s oil exports were cut off, a shortfall of five million barrels per day or more might occur, pushing prices close to $200 a barrel.
In its efforts to search for alternatives to Russian oil, the West is waiting to find a nuclear deal with Iran that would allow it to resume oil exports to compensate for the shortage of crude supply in the world.
But talks to revive the Iran nuclear deal are still uncertain following Russia demanded a US guarantee that the sanctions it faces over the conflict in Ukraine will not harm its trade with Tehran. Sources told Archyde.com that China had raised new demands.
Henderson refers to the “Al-Hurra” website, to the “reluctance” of American customers and companies to continue to purchase oil or oil products from Russia because of the “possible negative consequences that may occur to them.”
“The United States does not want to work on this file independently with Europe, and the latter is also reluctant to take this step,” the analyst explains.
He describes the current situation as “a combination of trying to avoid Russian oil and replace it in the long term by activating the production of shale oil and shale gas, and this will help solve the problem, but it will take several months, if not years, until we start once more.”
Al-Shobaki points out that the United States can afford to stop Russian oil exports, as its imports did not exceed 700,000 barrels two months ago, while European countries depend on Russia for 50 to 60 percent of their oil needs.
“There are many questions that we don’t know the answers to yet: Will there be official sanctions on Russian oil exports? Will they be from the United States or Europe,” Simon says.
Iranian oil..and a Russian wall
The United States and France opposed Moscow’s attempt to obstruct efforts to reach a nuclear agreement with Iran in an “attempt to create a hole in the sanctions due to the war in Ukraine” by talking regarding commercial interests with Tehran that should not be affected following the lifting of sanctions on Tehran, according to Al-Shobaki.
This affected the position of Tehran, which “called for the need for a new agreement that satisfies all parties.” A senior Iranian security official said expectations regarding the talks “remain unclear”.
Therefore, Al-Shweiki says, “The possibility of Iranian oil returning to the market is remote, following it became very close a few days ago, due to the crack created by Russia with Iran’s help.”
“Iran was the only real factor hanging over the market, but if a nuclear deal is delayed, we will reach the lowest levels of oil production faster, especially if Russian barrels remain out of the market for a long time,” Amrita Sen, co-founder of Amrita Sen told Archyde.com. .
Even if a nuclear deal is struck, analysts who spoke to AFP expect that Tehran will need several months to be able to export oil.
In the event that Iran enters the markets and “OPEC” is persuaded to increase production, Al-Shobaki says, the West will be able to impose sanctions on Russian oil “with ease.”
Simon points out that Gulf countries such as Saudi Arabia and the UAE can intervene to increase production by stopping work with Russia in “OPEC Plus” and increasing production, but it does not seem that they will take this step.
He says that he is convinced that Washington is pressuring Riyadh in this direction, but there is no indication that Riyadh is changing its view at the present time.
The Jordanian analyst indicates that oil prices will depend in the upcoming period on the issue of the decision regarding Russian energy exports, which are already facing automatic sanctions that have increased prices, such as the reluctance of investors, refineries, and even banks to buy Russian oil, in addition to the costs of risks, insurance and others.
In the event that no alternatives are available and sanctions are imposed on Russia, prices will rise to more than 180 dollars per barrel due to the tightness of the market in the first place, Al-Shobaki expected.
But if alternatives are found, then current prices can remain at $120 per barrel, and may drop to around $80 if the UAE and Saudi Arabia work at full capacity.
He says that prices may also fall as investors get rid of anxiety over Russian oil and the so-called “risk premium” imposed by investors due to the Russian invasion and the Russian nuclear threat, which is currently estimated at regarding 20 countries a barrel, and the cessation of the war in Ukraine, which consumes regarding one million barrels per day.
Simon says that if there is a ceasefire, a withdrawal of Russian forces or strategic changes in the war, “we will see a decline.”
Repercussions for the world
With global oil prices rising more than 60 percent since the start of 2022, along with other commodities, concerns regarding global economic growth and inflation have increased.
The International Monetary Fund warned, on Saturday, that the escalation of the conflict in Ukraine will have “devastating” economic repercussions at the global level, and the sanctions imposed on Russia will have a “very significant impact on the global economy and financial markets, with collateral repercussions on other countries,” according to the Fund.
Wolf box “The rise in prices will have impacts around the world, particularly on low-income families who devote more” of their budget to food and energy than the average, he said.
“While the outlook for economic growth has become bleak, inflation is worse because energy and agricultural prices have risen significantly since the beginning of the year, and this negative mix poses a major problem for central banks,” said Michael Hewson, an analyst at CMS Markets.
The bank, “Swiss Cote”, said that higher oil and commodity prices might “push European economies to rationalize consumption and affect the economic recovery and corporate profits in 2022.”
