- Secretary-General of the International Energy Forum McMonigle: Oil prices could spike to $150 per barrel.
- Current IEF projections point to an impact of around 1.5 million barrels per day (bpd) on Russian oil supply.
- McMonigle: We’re in store for a lot of volatility and higher prices over the next several months.
Oil prices could spike to $150 per barrel, especially if the situation with Russian oil supply worsens amid sanctions from the West and self-sanctioning from buyers, Joseph McMonigle, Secretary-General of the International Energy Forum (IEF), told Bloomberg on Tuesday.
Current IEF projections point to an impact of around 1.5 million barrels per day (bpd) on Russian oil supply after Putin invaded Ukraine, according to McMonigle.
Yet, it will probably take another two weeks to see hard data on the actual impact of how much Russian barrels have come off the market, he added.
“We’re in store for a lot of volatility and higher prices over the next several months. I think you could see big fluctuations and $150 a barrel is possible.” McMonigle told the program ‘Bloomberg Daybreak: Middle East.’
$150 oil may not be sustainable, but all will depend on what happens to Russian oil supplies, he added.
The IEF has not seen hard evidence that the skyrocketing oil prices have already led to demand destruction globally, according to McMonigle.
He estimates that global oil demand is back up to 98 percent of pre-pandemic levels, but supply is back up to only 95 percent of pre-COVID levels. While most people would think that the gap in supply is attributable to OPEC+ and some of its members not being able to pump to their quotas, half of the supply gap is actually from the United States. Capital discipline and supply chain constraints prevent American oil producers from pumping as much as they did just before COVID hit two years ago, the IEF’s McMonigle told Bloomberg.
Analysts and investment banks are not ruling out major disruptions to Russian supply, and are not ruling out $150 a barrel oil this year, either.
“If disruption to Russian volumes lasts throughout the year, Brent oil prices could exit the year at $185 bbl, likely leading to a significant 3 mbd drop in the global oil demand. Even if shale production responds to the price signal, it cannot grow by more than 1.4 mbd this year given labor and infrastructure constraints,” J.P. Morgan Global Research said earlier this month.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana Paraskova
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
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