The main strategy to curb Russian expansionist pretensions remains suffocate the country’s economy until the Kremlin gives in. The big drawback of this tactic is that Russian oil (and also its gas) are key to global consumption and the market is reeling at the prospect of a ban on almost one in ten barrels of crude oil produced in the world.
While the negotiations between the US and various European countries to formalize this embargo “advance”, according to the US Secretary of State himself, the oil price continues to climb and, at the close of the European markets, the barrel of Brent stood at 123.2 dollars. This rebound represented an increase of 6% compared to the previous day, although it exceeded 139 dollars per unit during the first trading hours of this Monday.
Oil prices are not expected to drop in the short term and as long as the conflict in Ukraine continues in the same terms, investors take it for granted that record highs will be reached that are much higher than those recorded in 2008 when it reached $145 per barrel.
A clue to this price stress can be seen in the Brent futures purchase contract market. During the day on Monday, more than 1,200 purchase options were traded on futures for May at 200 dollars a barrelas collected Bloomberg based on data from the ICE Futures Europe energy futures exchange.
In this way, the price of these contracts shot up 152%. Even for June, they have been negotiated at 150 dollars for each barrel of Brent, which would still mean registering an all-time high if normalized. Of course, the average of these contracts is still well below these figures, in addition to the fact that month after month the prices are descending.
The analysis firms are not optimistic in the short term and most are considering prices above the maximum reached in 2008. From Bank of America they have estimated that the interruption of Russian crude exports would generate “a five million deficit of barrels per day or more” in the market, which could translate into witnessing an increase in the price of oil that “in the case of Brent could be up to $200 per unit,” according to the firm.
“In the case of Brent could reach 200 dollars”
Along the same lines are the forecasts of JP Morgan, Mitsubishi UFJ Financial Group or OCBC Singapore, which estimate a short-term Brent price of between 180 and 185 dollars and in the case of JP Morgan these prices could even be transferred to the closing of the markets. Always in the context that the Russian invasion of Ukraine continues and that the measures imposed by the European Union and the United States to wear down Vladimir Putin are kept. More optimistic is the Goldman Sachs analysis department, which predicts that during the next three months the reference barrel in Europe can be seen around 150 dollars.
This context generates winners and losers among world oil companies. Discounting the Russian ones, whose market value has collapsed due to the flight of investors of the country, the North American Chevron stands out among the most bullish since the invasion of Ukraine began, since it has risen 20% since February 23. By contrast, European companies have behaved unevenly since Russia moved towards Kiev.
Thus, the oil companies that had the greatest presence in Russian territory have received the largest cuts to date, such as TotalEnergies, which yields almost 10%. Repsol, which already reduced its exposure in the largest country in the world at the beginning of the year, has risen 5% since the war began.
Fired Raw Materials
There are other strategic raw materials whose price has skyrocketed because Russia is one of the main world suppliers. This is the case of nickel, which it was revalued by 80% on Monday on the London Stock Exchange. However, aluminum fell 3% in value in the first session of the week, although it continues to mark its all-time high at $3,768 per tonne.
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