Analysts warn of Russia-Ukraine tensions’ effect on prices

HOUSTON — Turbulence between Ukraine and Russia could cause global oil prices to rise, a top analyst with IHS warned Monday.

In recent years, the global oil price has remained relatively stable between $100 and $111 per barrel. Without further conflicts that hamper the global crude supply — and if U.S. production grows at projected levels — that price could fall to around $106 per barrel, said Jim Burkhard, head of the IHS global oil market research and energy scenarios teams.

But that could be a big assumption, given the tension between Russia and Ukraine, along with growing anti-government demonstrations in Venezuela.

“Russia is the biggest oil producer in the world,” Burkhard said, speaking at the IHS CERAWeek energy conference in Houston. “The U.S. and its allies are considering economic sanctions against Russia. We don’t know what that means or what they’ll look like, but that anxiety that’s come about was reflected today.”

Burkhard cited brent crude prices that rose to more than $112 per barrel Monday, a five-month high.

Growing renewables

On the conference’s opening day, the regional conflict was the biggest topic. But experts noted that  many issues are at play in global energy markets.

Jone-Lin Wang, an IHS vice president, discussed the growing demand for natural gas as a transportation fuel, namely in ships and trucks.

Burkhard said that trend could shift up to 6 million barrels per day of oil demand to natural gas, representing about 6.5 percent of the global oil market. It’s a significant volume, Burkhard said, roughly the same decline in global demand for oil experienced in the 1980s, which had a huge effect on the economy.

Wang also noted the growing demand for electricity.  While much of the world increasingly is relying on gas to provide electric power, “coal will remain king” for the foreseeable future, Wang said. Still, coal will lose market share in global power generation, falling from 40 percent of global power generation to 35 percent in two decades.

Wang said renewables, however, pose the biggest threat to all fuel sources when it comes to shifts in power generation. Globally, renewables account for only about 5 percent of power generation today. By 2030, that could rise to 12 percent.

By that time, Wang said, renewables would likely be responsible for a larger share of power generation than nuclear energy.

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