Analysts have cautioned that the U.S. ban on Russian oil could worsen the already-spiking oil and food prices and set off a recession if further escalated, reports CNBC.
“If Russia retaliates by refusing to supply Europe with oil, that could “easily” send oil prices up another $20 to $30 per barrel”, Andy Lipow, president of Lipow Oil Associates, told CNBC.
“My greatest fear is that these prices have risen so fast that you cause a recession in Europe and Latin America, that rolls on into the United States, that ultimately affects China’s ability to sell consumer goods to the rest of the world,” he told CNBC’s “Squawk Box Asia” on Wednesday.
According to Goldman Sachs, Russia supplies 11% of global oil consumption, 17% of global gas consumption, and 40% of Western European gas consumption as of 2021.
Caroline Bain, the chief commodities economist at Capital Economics, states, “In a worst-case scenario, a complete ban on Russian energy imports in all major consuming countries would “severely reduce and disrupt energy supply,” sending prices further into “uncharted territory.”
“Inflation in advanced economies would end the year at around 5% as opposed to the 2.4% we forecast prior to the invasion, and the effects of the drop in households’ spending power and power rationing in Europe would push the euro-zone into recession” mentioned Bain.
Photo by Gerd Altmann from Pixabay
