Analyst Says, High Oil Prices May Lead to Economic Destruction

Oil prices are rising higher on supply issues as the highly uncertain Russia-Ukraine event develops, and this may lead to economic recession due to demand destruction, according to an oil analyst, Paul Sankey of Sankey Research.

An Oil analyst said, “I’m concerned that we don’t have enough oil at all here, and we need to go to $120 to $150 per barrel, and then we get into economic destruction.”

The Sankey Research sees oil currently trading between $100 to $150 per barrel until the situation in Ukraine gets resolved, as per the research note.

International benchmark Brent crude oil prices jumped to $116.59 per barrel, after earlier $119 level. U.S. crude oil prices increased to $114.21 per barrel.

Sankey said, “Oil cargoes from Russia simply aren’t moving following the invasion and news of sanctions, despite lower prices. There’s a major, physical, immediate outage that caught an already tight market with very low inventories. Everyone is worried that the elevated prices will be highly recessionary, destroy oil demand and slow down many economies.”

Despite the rising oil prices, Sankey expressed that it could have been the appropriate call for OPEC and its partners to continue with their small production hike in April as planned.