The price of
crude oil almost briefly touched $130.00 over the fears of a long drawn out conflict
between Ukraine and Russia. Although the Russian oil has not come under the
punishing Western sanctions yet, the speculation is rife that it will be the
next.
As of 11:45 GMT,
the price of WTI and Brent stood at $122.55 and $124.80 respectively; crude oil
prices have already reached 14-year-old high.
The price of
LNG, Liquified Natural Gas, has also spiked in proportion to the cautious
sentiments that sweep across the markets.
An extreme
move of that kind, however, does not come without a cost for the Western
economies; it goes without saying the impact of rising oil prices in every
sector in the global economy, ranging from the developing countries to the
developed countries.
Since the
OPEC+ has not responded enthusiastically to the anticipated shortage of crude
oil in the international markets in terms of an action plan, we can just
imagine how bad things would be in the event of the Western sanctions being
extended to the Russian oil and gas sectors too.
It is
equally puzzling how Russia would cope with such an eventuality; it already
views the sanctions as a form of declaring war by the West.
Without a
substitute in the offing, how the Western nations are going to cope with the impending
shortfall of crude oil supply is something that remains to be seen; when you look
at the challenges, just on the logistics-front, it is easier said than done.
The rapidly evolving
geopolitics since the war broke out in Ukraine will cause ripples in the OPEC+ too
in which Russia, not only a key member, but also sees eye to eye with its
de-facto leader, Saudi Arabia; the cohesion of the cartel may be under threat
too, if the West wants Russia out.
If the war
drags on, it is not just the OPEC+ that will be subjected to a stress-test; the
NATO, EU and even the UN will be under pressure too as the members do not see eye
to eye on quite a few issues; rising energy prices is potentially a key factor
that can cause unease among members.
Although the
price of crude oil has risen sharply, it cannot be classified as an exponential
rise as yet; it is still based on speculation in anticipation of a serious
supply shortfall.
The Western
leaders may try their best in a very difficult situation not to let the crisis
get out of hand – in a short time – that may evolve into a catastrophe, not
just ruining economies, but also threatening our own existence.
