Oil prices rose above $110 a barrel on Wednesday after major global energy companies boycotted Russian crude after Moscow’s invasion of Ukraine as the war in Ukraine entered its seventh day.

Brent crude rose above $113 a barrel on Wednesday, up 6%, its highest level in eight years, extending its gains this week to nearly 10%.

Meanwhile, demand for Russian oil has fallen as consultancy Energy Aspects said 70% of Russian crude is “trying to find a buyer,” according to the Financial Times.

European gas prices jumped 50% on Wednesday to an all-time high of 185 euros per megawatt-hour, a sign that the price hike is not limited to oil.

German Economy Minister Robert Habeck said on Wednesday that “the worst is yet to come” and that Russia is still providing gas, but that his country should prepare for what comes next; Because it “may have to keep the coal plants running”, because Russia supplies about 40% of the electricity to Europe.

continuous rise

In the current situation, Tariq Al-Rifai, CEO of the Corum Center for Strategic Research in London, expects the price of Brent crude to reach $115 per barrel in the near term. .

Al-Rifai added that if the pace of the war continues without a clear solution, the price hike will expand more in the long run.

The failure of Russian companies to sell oil is due to the sanctions imposed on them and the isolation of some Russian companies from the global financial system Swift. However, buyers of Russian crude, led by China, pointed out the difficulty of controlling Iranian oil sales during the sanctions imposed on Iran.
Russia is the world’s third largest oil producer after the United States and Saudi Arabia, and typically exports about 7.5 million barrels per day of oil and other energy products, with Europe taking the lead, according to global financial group ENK. Russia is a consumer of oil, which is estimated at 53%, and Asia is another important buyer; It buys 39% of Russia’s crude oil production.

OPEC policy

The Organization of the Petroleum Exporting Countries and its allies – including Russia – will meet later on Wednesday to discuss production levels. But despite the turmoil in the oil markets, the group is expected to stick to its plan to increase production by 400,000 barrels per day in April.

Commenting on OPEC’s production methods, the CEO of the Kunlun Center for Strategic Studies said that this measure was expected, noting that OPEC is currently not ready to change its policy, which Al-Rifai believes is “important to maintain stability in the region.” Oil market.
And on the future risks in the oil market, he said: “The oil trade is based on geopolitical expectations and fears of the spread of war to the rest of Europe.”

It is worth noting that Russian Urals crude is an important component in the refineries of 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.