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The Russia SWIFT Ban Could Push Oil Prices Above 100 Dollars

BY Lynnet Okumu · March 1, 2022 01:03 pm

KEY POINTS

Oil prices last jumped above 100 dollars a barrel when Russian forces invaded Ukraine on February 24, 2022, with Brent rising above 105 dollars a barrel for the first time since mid-2014. 

KEY TAKEAWAYS

Experts warned that the crude oil prices were likely to hit 120 dollars a barrel if the supplies become restricted. This could mean that petrol prices would significantly rise.

Western allies decided to block certain Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a payments system.

This according to analysts, is likely to lift oil prices well above 100 dollars a barrel as risks with trading Russian oil continue to spike.

Traders and analysts argue that the Western sanctions might severely disrupt or halt Russian exports of all commodities from oil and metals to grains for days if not weeks, until clarity is established on exemptions.

According to one analyst, Amrita Sen from consultancy Energy Aspects, for example, Brent crude prices will go back above 100 dollars and probably return to the highs of 105 dollars. She further added that there’s also a possibility it could jump to 110 dollars

“While trying to exempt energy transactions, SWIFT can still cause significant disruption to energy trade flows in the near term, at least until buyers switch to alternatives like Telex or other systems,” Sen said.

Oil prices last jumped above 100 dollars a barrel when Russian forces invaded Ukraine on February 24, 2022, with Brent rising above 105 dollars a barrel for the first time since mid-2014. However, the Prices dropped back below 100 dollars a barrel by Friday 25th February 2022.

UBS analyst Giovanni Staunovo said that with the low inventories and dwindling spare capacity, oil prices are likely to react sensitively and open higher.

Japan, on Sunday, Feb 27,  said it would join other Western allies in blocking certain Russian banks to the SWIFT international payment system, Prime Minister Fumio Kishida said.

The Russia -Ukraine attack has so far affected not only the price of oil but also the prices of other commodities such as natural gas which has increased by 5.39 percent, and spot gold, which is typically considered a safe-haven asset, rising 1.82 percent.

The news that President Vladimir Putin was launching a military attack in Ukraine on 24TH Feb 2022 sent the international Brent Crude oil index to a high last experienced in 2014

Experts warned that the crude oil prices were likely to hit 120 dollars a barrel if the supplies become restricted. This could mean that petrol prices would significantly rise.

Experts further add that if Putin launches a full-scale war on Ukraine, oil prices will hit 140 dollars a barrel.

Kenyans, who are currently choked by the increased food prices, should prepare for soaring fuel prices and a likely further rise to the food bills amid the crisis in eastern Europe. The effect will spill off and hike transport prices, energy bills, and the cost of manufactured goods.

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