On Wednesday, Brent crude rose above $113 a barrel, by 6 percent, its highest level in eight years, to extend its gains this week to nearly 10 percent.
In parallel, the demand for Russian oil collapsed, as the consultancy “Energy Aspects” said that 70 percent of Russian crude was “struggling to find buyers”, according to the Financial Times.
In a sign that price jumps are not limited to oil, European natural gas prices rose by 50 percent, on Wednesday, to an all-time high of 185 euros per megawatt-hour.
German Economy Minister Robert Habeck said on Wednesday that “the worst case scenario is yet to come” and that Russia was still sending gas, but that his country should prepare for what was next; Because it “may have to keep the coal-fired power plants running”, as Russia supplies Europe with about 40 percent.
For his part, the CEO of the Corum Center for Strategic Studies in London, Tariq Al-Rifai, expected the price of a barrel of Brent crude to reach 115 US dollars per barrel in the short term, according to the assessment of the current situation.
Al-Rifai added to “Sky News Arabia”, that if the pace of the war continues in this way without reaching a clear solution, the price hike will go further in the long term.
The reason for the failure of Russian companies to sell oil is due to the sanctions that were imposed on them and the isolation of some Russian companies from the global financial system Swift. Despite that, there are buyers of Russian crude, led by China, recalling the difficulty of controlling Iranian oil sales during the imposition of sanctions on Iran.
According to the global financial group ENK, Russia is the third largest oil producer in the world after the United States and Saudi Arabia, and it usually exports about 7.5 million barrels per day of oil and other energy products, and Europe is at the forefront of Russian oil consumers, with an estimated percentage of about 53 percent of it, while Asia is another important buyer; It buys 39 percent of Russia’s crude production.
The Organization of the Petroleum Exporting Countries and its allies – including Russia – are due to meet later on Wednesday to discuss production levels. But despite the turmoil in the oil markets, the organization is expected to stick to its plan to increase production by 400,000 barrels per day in April.
The CEO of the Corum Center for Strategic Studies comments on the OPEC production approach, saying that this measure was expected, noting that OPEC is not ready to change its policy at this time, which Al-Rifai considers “important to maintain the stability of oil markets.”
Regarding the future risks to the oil markets, he says: “Oil trading is based on geopolitical expectations, with fears that the war will spread to other countries in Europe.”
It is noteworthy that Russian Urals crude is an essential component of refineries in Northwest Europe and the Mediterranean. Buyers include Germany, Italy, the Netherlands, Poland, Finland, Lithuania, Greece, Romania, Turkey and Bulgaria; According to Platts.
However, a number of European refiners, including Finland’s Nest and Sweden’s Priim, are now turning away from Russian oil and looking for supplies elsewhere.