Will oil continue above $120 a barrel?

The “Sky News Arabia” website monitors the journey of oil prices since the start of the war and its impact as well as the “Corona” crisis and Houthi attacks on Saudi oil facilities, in addition to future expectations of experts.

Biggest jump in 15 years

Oil has risen more than 50 percent this year, reaching its highest level since 2008, when Brent crude reached $139.13 and West Texas Intermediate crude reached $130.50.

The US sanctions on Russia accelerated the journey of the rise in oil prices, which began after supply failed to meet demand with the recovery from the repercussions of the “Corona” virus.

And the risks of supply shortages increase with the imposition of more sanctions on Russian oil, which constitutes 10 percent of global production, according to expectations of engineer Medhat Youssef, former deputy head of the Egyptian Petroleum Authority, in an interview with Sky News Arabia.

In contrast to the Ukraine war, there are the Houthi terrorist attacks on oil facilities, the most recent of which, on Friday, was a missile attack that hit the storage facility of the Saudi Aramco oil company, which fuels oil prices, because it multiplies concerns about supplies.

During the last week, the price of Brent crude futures moved up and down around $120 a barrel, before closing Friday at $120.65, with the United States and the European Union close to concluding an agreement to stop relying on Russian supplies.

According to engineer Medhat Youssef, energy supplies are secure and there is no fear of the impact of high prices on those supplies, but America’s attempts to stop Russian oil supplies are what raise fears and fuel the rise in prices, especially since Russia is the largest oil producer in the world.

He explained that isolating Russian oil needs to provide parallel supplies, which is difficult in the short term with Russia’s relationship with the “OPEC +” alliance, which guarantees the stability of supplies.

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Hours before the start of the war, oil prices were stable below their highest levels since 2014, and Brent crude at the time recorded $ 96.84 a barrel by the end of February 23, and with the start of military operations, Brent crude exceeded $100 a barrel for the first time since 2014, and hours later it exceeded $105 a barrel before the war began. It falls at the settlement of 99.08 dollars per barrel.

Oil prices continued to hover around that level, up and down, until Washington announced that it was studying with its European allies a ban on importing Russian oil and the delay in reaching an agreement with Iran, so oil prices jumped to their highest levels since 2008 and Brent crude recorded $ 139.11, before losing some gains to record upon settlement. $124.71.

And after 30 days of the war, and at the end of trading on Friday, March 25, crude oil prices rose more than one percent to more than $ 120 a barrel after traders demanded purchases following a missile attack on an oil distribution facility in Saudi Arabia, but the possibility of withdrawing the United States from the reserves Oil calmed their fears.

Brent crude rose at the close of Friday 1.62 dollars, or 1.4 percent, to $ 120.65 a barrel, and US West Texas Intermediate crude rose 1.56 dollars, or 1.4 percent, to 113.90 dollars. The two benchmarks achieved their first weekly rise in three weeks. Brent crude rose more than 11.5 percent and West Texas Intermediate 8.8 percent.

Saudi Arabia, the world’s largest oil exporter, announced that it would not be responsible for any disruption to oil supplies if the Houthi attacks on it continued.

Expectations come true

With the onset of the crisis in Ukraine, investment bank Goldman Sachs said the global benchmark would rise above $115 “with significant upside risks”.

He added, in his monthly forecast report, that the decline in demand is the only one that can stop these rises, which did not happen, and oil exceeded this level by about 5 dollars.

Last week, Trafigura Group forecast that crude oil prices will continue to rise, potentially reaching $150 in the summer.

And Vitol, the global energy trader, also expected that demand in 2022 would exceed pre-Corona levels.

Last Monday, the TASS news agency quoted Russian Deputy Prime Minister Alexander Novak as saying that oil prices could reach $300 a barrel if the West bans the purchase of Russian crude.

Regarding his expectations for oil prices, Medhat Youssef believes that prices are subject to tension, but any lull in the Ukrainian crisis will bring down prices, as happened with the start of negotiations between the two sides when oil fell to $98.

He warned that the jump in energy prices would lead to an acceleration of inflation, which would lead to a slowdown in the global economy again, and thus reduce oil gains relatively with the decline in production operations.