Crude oil prices could surge to as high as $200 a barrel if supplies from the Middle East to international markets fall significantly, Russell Hardy, CEO of global commodities trading giant Vitol, has warned.
Hardy made the remarks at the Energy Intelligence Forum in London on Tuesday, raising concerns over the stability of global energy supplies ahead of winter.
He said around 12 million barrels of crude oil and another 2 million barrels of refined fuel had been shipped from the Middle East to international markets each day over the past seven to 10 days.
However, if that flow cannot be maintained, the global energy market could face significant disruption, he warned.
According to Hardy, oil inventories in Western countries are already relatively low ahead of the winter season. He said the market could remain balanced only if between 10 million and 14 million barrels of oil continue to be shipped from the Middle East every day.
A major disruption to Middle Eastern oil exports could quickly intensify supply shortages, potentially pushing the international benchmark crude price to $200 a barrel, Hardy cautioned.
The Middle East plays a crucial role in global oil supplies, with large volumes of crude and refined fuel shipped daily to markets around the world. Any major disruption to the region’s supply network could therefore have a rapid impact on international prices.
The risk could be greater as Western countries enter the winter season with relatively low oil inventories. Higher energy demand during winter, particularly in Europe and other parts of the Northern Hemisphere, could put additional pressure on supplies.
A sharp rise in oil prices would affect not only the energy sector but also transportation, electricity generation, manufacturing, food production and freight costs. This could further fuel inflationary pressure worldwide.
Meanwhile, the European Union is preparing to discuss the situation surrounding Middle Eastern oil supplies.
A European Commission spokesperson said the EU’s Oil Coordination Group would meet at 8am local time on Wednesday to assess the latest situation and determine the bloc’s position.
The meeting comes amid growing concerns over international energy supplies due to continuing instability in the Middle East.
Analysts say a major energy crisis could still be avoided if oil supplies from the region remain stable. However, prolonged disruptions to tanker shipments, combined with declining inventories in Western countries, could rapidly tighten the market.
In such a scenario, oil prices approaching $200 a barrel would not only represent a sharp increase in energy costs but could also pose a significant risk to the global economy.
