Ever since the war between Ukraine-Russia broke out, the oil industry has been a catastrophe. After the invasion of Ukraine in the early hours of February 24th, the US and its allies have imposed heavy sanctions on Russia and have also banned imports of Russian energy while the UK is still working to phase out its Russian supply by the end of Q4 2022. Even though Europe has not sanctioned oil and gas from Russia, a large number of European buyers are condemning Russia’s war and pledged not to buy oil from them with the intention of inflicting economic pain against Russia. The economic impact of the war is not just constricted to oil and natural gas, and it extends to commodities and fertilizers as well.

Amid all geopolitical and humanitarian crises, the unprecedented surge in crude oil prices has been flickering headlines around the world. The war came at a time when already inflated oil prices have since skyrocketed to over $110 per Barrel, with inventories in OECD economies depreciating below the five-year average while sitting at their lowest levels in eight years. The tensions in OPEC remain escalated after Saudi Arabia warned of supply disruption unless western allies take actions to help counter attacks from Iranian-backed Yemeni rebels on its energy infrastructures. In the previous month, the OPEC+ failed to meet its production target by more than 1 million barrels per day. Rising strategic tensions with no signs of ease anytime soon in Europe and the Middle East coupled with production cuts from Russia might further drive the prices higher in an already tight market.

Saudi Aramco, a Saudi Arabian Oil Company, one of the world’s largest companies in terms of revenue, has announced plans to boost its oil production capacity to 13 million barrels per day. This sanguine plan will ensure domestic as well as international supply in the future and will certainly be good news for oil importers as the company has zero intention of increasing production beyond the current OPEC+ plan.