Strong global demand, coupled with recent tensions between Russia and Ukraine, Brent crude oil hit a seven-year high this month.
Oil prices have been rising steadily since the beginning of the year, rising from below $80 a barrel to about $90 a barrel.
On Feb. 7, David Roche, president of an independent strategy firm and former senior strategic analyst at Morgan Stanley, predicted in an interview with CNBC that if Russia goes to war with Ukraine, oil prices will "definitely" reach $120 a barrel and the global economy will "change radically."
Roche said that if the Russo-Ukrainian war breaks out, it may hinder the export of goods from both countries, including oil, natural gas and coal, and people will definitely see oil prices above $120 a barrel.
The situation in Russia and Ukraine is tense
Recently, the deterioration of Russian-Ukrainian relations has accelerated, and the two sides have deployed a large number of military personnel and equipment in the border areas of the two countries.
Recently, the Ukrainian military released a set of photos of U.S. troops training Ukrainian troops.
The United States and NATO claim that Russia has gathered heavy troops and has the potential to "invade". The Russian side denied that NATO activities threatened Russia's border security and that Russia had the right to mobilize troops within its territory to defend its territory.
Russian presidential press secretary Dmitry Peskov said that the hysterical incitement of the United States (anti-Russian sentiment) has led to Ukraine's fear of Russia's so-called "invasion", and people are eager to rush to the front line, "We have always condemned this (incitement) policy and called on the United States and its allies on the European continent to abandon this policy."
Are crude oil prices continuing to grow?
A series of power outages in Libya have stalled crude oil production, coupled with geopolitical disputes in Ukraine and the Middle East, which have exacerbated the crude oil market, which was already tightly supplied and demand.
Roche said that even if the potential impact on oil prices is not considered, the Russo-Ukrainian war will have far-reaching economic consequences, and many investors have underestimated the impact of the Russo-Ukrainian crisis.
Wall Street has raised its crude oil target, with the Bank of America expecting Brent to reach $120 in the middle of this year, and goldman Sachs and Morgan Stanley both believing that the price of crude oil will reach the $100 mark in the third quarter. JPMorgan chase said that if crude oil breaks through $150 this quarter, economic growth will be significantly eroded and inflation will soar.
According to Bloomberg, Morgan Stanley analyst Martijn Rats believes that the slow growth of crude oil supply will bring more momentum to the rise in oil prices, and the only force for prices to stabilize and fall at this stage is the wavering demand side.
Bank of America analyst Francisco Blanch also said that crude oil demand in some economies has not yet returned to pre-epidemic levels, and with measures such as vaccine expansion and vaccination to gradually control the epidemic, international air travel is warming up, which is expected to further increase crude oil demand.
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