That’s how expensive a barrel of oil could get by year-end—about $75 more than now—if Russian oil supplies continue to be disrupted, according to analysts.
Prices for Brent crude, the global oil benchmark, have already climbed more than $15 per barrel since Russia invaded Ukraine, prompting countries around the world to impose a series of economic sanctions against Russia, the world’s third-largest oil producer. Brent prices ended Thursday above $110 a barrel, off their recent highs but still above $100, a threshold crossed for the first time since 2014 because of the war.
The $185 is how high prices could go if fallout from the invasion continues to disrupt the market all year, JPMorgan analysts said in a research note Thursday. That likely means consumers would see sharply higher prices all around this year, but especially at the gas pump. Oil prices make up about half the price of a gallon of gas.
Even though sanctions haven’t been imposed directly on Russian energy exports, buyers are reluctant to purchase Russian oil, analysts said. The risk that sanctions are still coming, as well as moral objections, have them resisting Russia’s vast supply of oil, analysts noted, and there’s already a concern that the world doesn’t have enough oil to meet the demand.
“Even though sanctions are not targeting Russian energy exports, the risk of sanctions, along with possibly public pressure is leaving buyers reluctant to purchase Russian oil,” Warren Patterson, head of commodities strategy at ING, wrote in a commentary Thursday.
As of Thursday, 66% of Russian oil was having trouble finding buyers, according to the JPMorgan analysts.
The scale of the current supply shock is so large that oil prices need to increase to $120 per barrel and stay there for months before people reduce their consumption habits, putting supply and demand back in balance, the analysts added. This assumes the U.S. and Iran don’t strike a deal to bring Iranian crude oil supplies to the market, they said.
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