Oil prices are souring and don’t look to be stopping. As sanctions hit Russia, the second-largest exporter of oil in the world, after its invasion of Ukraine, a global search for crude oil spare barrels is under way. However, don’t be surprised if Saudi Arabia doesn’t step in to help.

The kingdom could reduce global oil prices which have risen to their highest point since 2014. There are claims that Saudi Arabia can increase its production by 2,000,000 barrels per day.
Saudi Arabia’s government stated Tuesday that it believes the Organization of the Petroleum Exporting Countries should continue to follow its plan of increasing production gradually. This means that markets will not be able to take much relief while investors try to evaluate the impact of rising oil prices.

A higher oil price would not be good for the global economy, particularly those regions that lack a shale industry. Unlike America, Europe is has a lot less production than the United States and has been plagued by the Covid-19 pandemic. In addition, China imports vast amounts of oil, and its economic crisis is making the situation worse. In addition to a potential recession, higher oil prices will trigger inflation and higher current-account deficits in many developing countries.

The prices of natural gas have also increased. The Dutch April gas contract reached a record high of EUR185/megawatt hour and is currently trading at EUR171.19/megawatt hour. This is 41% more than the previous record. After touching 398.05p per the therm last December, British wholesale gas prices are 35% higher at 390.79p/therm. This is close to the record of 451p.