Oil could hit $150 per barrel if the west sanctions Russia’s energy exports

Since the inception of the recent Russian military invasion in Ukraine, the Western world has felt a huge resistance in the placement of sanctions in Russia’s oil and gas exports, as a result of the aftermath effects on their energy supplies and price skyrocket.

Though the contingency of Russia’s energy export remains high, after much analysis, it was proven that a sanction on Russia would definitely amount to a hike in the oil and gasoline prices as high as $150 per barrel.

Even in the absence of a direct sanction in Russia’s energy exports, the prices are bound to still tarry high, based on the current situation at hand because, both the buyers and refiners have deliberated placing sanctions on Russia by finding alternative routes for their crude supplies. This will invariably affect Russia's oil flow market in replacing already lost barrels.

A Russian marketing and refining company, Neste Oyj clearly stated,

       “ “Due to the current situation and the uncertainty in the market, Neste has mostly replaced Russian crude oil with other crudes, such as North Sea oil.” They further stated that Neste is preparing “for various options in procurement, production, and logistics.”

Currently, Moscow is facing the challenges of selling seaborne crude and oil products with traders and refiners who lost interest in partnering with Russia at the moment.

In prospect, the oil market is now on tenterhooks on the agreement or sanctions on Russian oil. Refiners are already replacing the Russian crude, even Monroe Energy, the third-biggest U.S buyer of Russian oil has started suspending purchases.

Analytically, the Iranian nuclear deal gave hope of Iran returning to oil exports which would cause a slow down in price, yet barrels from the Islamic Republic cannot amount to the loss of Russian oil as Russia is in major disruption.

Western allies have resolved to absolutely separate Russian banks with the international SWIFT system and this is a great setback on Russia’s finance and market.  Russia exports estimated about 5 million bpd of crude and 2.8 million bpd of refined products and even without sanctions, it has reduced by one-third.

Conclusively, Russia's oil flow is on a major disorder and setback, even in the absence of direct but existing sanctions and the market economy will definitely suffer if nothing is usefully put in place.  Over the past week, a Russian oil and gas company “Surgutneftegaz” has faced failure in awarding numbers of cargoes on three consecutive times even in the presence of large discounts of the Urals grade to Dated Brent, hence Russia is already losing barrels by self-sanctioning.