Gas prices in Europe are up 40 percent

Russia's armed forces have attacked Ukraine to demilitarize it. Russia is one of the leading oil and gas manufacturers. Ukraine, in turn, is a transit country where a large part of oil and natural gas flows into Europe.

It is practically inevitable that their prices will rise as a result of the risk. The query is, how a long way can they go. Gas prices in Europe rose 40 percent on Thursday. It is possible that oil will make a similar leap.

From Iranian-Iraqi oil to the annexation of Crimea

Over the last four decades, there have been several major conflicts that have potentially threatened oil supplies. The first was the Iran-Iraq war, which began in September 1980. Oil prices rose by 10 percent. That doesn't seem like much, but as a result of the 1979 Iranian revolution, which plunged the petrochemical industry into chaos, the market was already extremely tense.

By the time the war between Iran and Iraq began, oil prices had risen 150 percent in the past two years, rising from $ 13 a barrel to more than $ 33. Growth of 10 percent after the start of the conflict has created a long-term peak that has not been long overcome. Oil prices began to fall in the 1980s due to lower consumption and new sources of production.

The Gulf War, which also included Operation Desert Storm, came in response to the Iraqi army's invasion of Kuwait in August 1990 and brought another oil shock. Oil prices have risen from $ 20 to almost $ 40 in a matter of weeks. However, the growth lasted a short time, only a few months. Already at the beginning of 1991, prices returned.

During the annexation of Crimea in 2014, oil prices did not react at all to the change. Why should they grow fast now?

The Russia-Ukraine conflict is not the main cause of rising oil prices

If there was enough oil on the market, the current shock might be severe, but only very short-lived. But the situation is different today. TREND has already written about the reasons that cause the price of oil to rise . In short, the oil market is tight, which means that consumption is higher than production and stocks are mostly declining.

In addition, the world's free production capacity has not increased. As a result, traders are much more sensitive to potential production downtime.

Even without Russia's invasion of Ukraine, oil would probably go above $ 100 a barrel. The escalation of the conflict has accelerated this development.