By Sibel Morrow
ANKARA (AA) - The price of Brent oil could reach as high as $150 due to the ongoing Russia-Ukraine war and the EU embargo on Russian oil imports, Alahdal A. Hussein, the founder of Malaysia-based oil and gas industry analytical and business intelligence platform Oil Industry Insight, told Anadolu Agency in an exclusive interview.
EU leaders met on Monday to discuss a sixth sanctions package which included a partial ban on Russian oil. The meeting led to an agreement to cut 90% of oil imports from Russia by the end of this year.
EU leaders agreed "that the sixth package of sanctions against Russia will cover crude oil as well as petroleum products delivered from Russia into member states, with a temporary exception for crude oil delivered by pipeline."
The embargo will cover seaborne oil and partially exempt pipeline oil, which Hungary will use to transport oil by the southern Druzhba pipeline.
The ban will be finalized after agreeing on the technical details later in the week.
The price of Brent has already seen $120 per barrel on Tuesday's opening after the decision was announced.
- Alternatives to Russian oil hard to find
"There will be no overnight replacement for Russian oil and gas. And if we assume that they closed their eyes and just went on with it despite all these challenges, then they will have to rely on Africa, Middle East, and USA to try to replace the Russian oil. That will lead to huge increase in oil prices," Hussein said.
He said China and Asian countries will benefit from the ban as Russia will offer its oil at discounted rates in these markets to try to keep the global market share.
"Oil prices are going to stay high as long as there is a war ongoing," he said, and added that with the embargo, the Brent hitting $150 is "not too far."
- Brent crude's trajectory pointing upward
Dr. Mamdouh G. Salameh, an international oil economist and visiting professor of energy economics at the ESCP Europe Business School said there was an upward trend in prices even before the Russia-Ukraine war started on Feb. 24.
He suggested that this rise was underpinned by a global oil market which has been in its most bullish state since the 2014 oil price collapse and a global oil demand in a super-cycle phase of accelerating demand growth that could last over 10 years.
Reiterating that the Brent crude started to surge in January 2021 ending the year at $94-$95 and hitting $100 in January 2022, Salameh stressed that the Ukraine conflict added a premium estimated $25-$30 to the price of a barrel, but it has since fizzled out leaving oil prices to market forces.
Brent crude's current trajectory is pointing upward because the market is very tight with a shrinking global spare oil production capacity, including that of the OPEC+ of no more than 2-2.5 million barrels a day, according to Salameh.
With the ban on imports, the Brent could hit $130-140 a barrel, he warned.
- Volatility to continue
Christof Ruhl, a senior research scholar at the Center on Global Energy Policy of Columbia University in the New York City, stressed that oil prices are trending upward in the short-term but for the last few months have traded – with high volatility – at a range of around $100-$110.
The current situation is characterized by fears of a slowdown in global economic activity, including in China, and widening of oil sanctions against Russia by the EU, Ruhl said, adding that the former drags prices down and the latter drives them up, explaining the current fluctuation.
"I see this volatility continuing. There is also an important aspect often missed. There is a global mismatch on the product side – so product prices for gasoline and especially for diesel have increased by more than crude oil prices," he noted.