Fitch: Oil price expected to rise above $100 if situation around Ukraine escalates

The aggravation of geopolitical tensions around Ukraine is contributing to the rise in oil prices, which can reach $15 per barrel. But with the normalization of the situation, no growth may occur, Dmitry Marinchenko, senior director of EMEA Natural Resources & Commodities at the Fitch international rating agency, told TASS, Report informs.

“Probably, the geopolitical premium in the oil price is now about $15 per barrel. If everything goes according to the calmest scenario, which implies the absence of further escalation, minimal sanctions that don’t affect the oil and gas sector, freezing of the conflict, as a result, this geopolitical premium will come to naught,” he thinks.

The cost of Brent amid reports about the escalation of the situation around Ukraine has been growing for several days in a row and on February 22 exceeded $99 per barrel.

If the aggravation of the situation gains momentum, moves into a more acute phase, which in response may lead to sanctions on Russian oil exports, the price of oil “could potentially significantly exceed $100 per barrel,” Marinchenko said. Such a scenario, according to the expert, “could provoke an energy crisis.”

“Russia’s share in the world oil market is more than 10%, there is nothing to replace it, there is little free capacity, especially in view of the gradual recovery in demand - even if sanctions against Iran can be lifted in the near future,” he concluded.