IEF: EU Embargo Could Send Oil Prices “Well Above $100”

• The International Energy Forum believes the price of Brent could easily break above $100 when the EU embargo on Russian oil comes into effect.
• The IEF believes the oil market could lose anywhere between 1 million and 3 million barrels per day when the sanctions take effect.
• The secretary general of the IEF emphasized that physical markets are very tight while paper markets are pricing in bad economic news.

Brent crude prices could easily break above $100 per barrel again if losses of supply from Russia are close to 3 million barrels per day (bpd) when the EU embargo on Russian crude imports by sea enters into force next month, the Riyadh-based International Energy Forum (IEF) thinks.

The IEF and many consuming countries, not only the United States, are concerned about what will happen to the oil market when the EU sanctions kick in, Joseph McMonigle, secretary general of the IEF, told Bloomberg TV in an interview on the sidelines of the ADIPEC energy conference in Abu Dhabi. 

According to the IEF, the world’s largest international organization of energy ministers, the oil market could lose anywhere between 1 million bpd and 3 million bpd of oil supply from Russia when the sanctions take effect.

In recent months, there have been many predictions and a lot of speculation about what might happen with the embargo, but “This is when you’ll actually see Russian barrels come off the market,” IEF’s McMonigle told Bloomberg.

“Maybe Russia will figure a way around it, but not at first,” McMonigle added.

If 3 million bpd of Russian oil is lost, Brent Crude will easily break $100 a barrel, he said.  

There will be a lot of volatility as the embargo begins because there will not be much transparency about the actual number of Russian barrels coming off the market, according to McMonigle.

So Brent prices could go “well above $100” with a lot of volatility, which is not good for the market, he said.

Early on Tuesday, Brent was up by 2% at $94.74 as of 8:55 a.m. ET as the U.S. dollar weakened today.

Commenting on the current market situation, McMonigle told Bloomberg, “The physical markets are very tight. The paper markets are pricing in bad economic news and a recession.”   

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• 3 Oil Stocks Flying Under The Radar After OPEC+ Cuts
• Colombia’s Oil Industry In Jeopardy As Cocaine Production Soars To New Record
• Deep OPEC Output Cuts Upend Biden’s Attempt To Lower Oil Prices