The fallout from Russia’s invasion of Ukraine shows no signs of stopping at the country’s borders. Moscow’s assault compounds existing upward pressures on oil prices posed by a cold winter in the US and the easing of Omicron-related demand constraints, sending Brent crude to over USD 100 per barrel. Prices not seen since before the 2014 crash have scope to climb higher. Although sanctions have so far avoided targeting Russia’s energy sector, a reversal of this decision could send oil rocketing to upward of USD 125 per barrel according to some forecasts.

For oil exporters this marks a rare cause for optimism after years of gloom, providing an opportunity for dysfunctional producers such as Algeria, Iraq and Nigeria to fill their coffers and consider embarking on much-needed structural reforms. In its February meeting, OPEC+ decided to hold firm on scheduled production increases, indicating the desire of Saudi Arabia and other members to resist international pressure and capitalise on the moment by maintaining its tight squeeze on the market.

Rising prices will be less welcome elsewhere, especially where industrial output remains contingent on oil imports. China and India will continue to feel the squeeze, potentially slowing growth in the coming months. Higher energy costs will exacerbate inflationary pressures driving existing cost-of-living increases, further dampening consumer-led growth and contributing to political uncertainty. In developed and emerging markets alike, the spectre of stagflation looms large.

How high prices can climb and for how long are tough to forecast; no one can be sure of the trajectory of the war in Ukraine or the future of relations between Russia and the West. Meanwhile, the world keeps on turning. Instability in Libya may disrupt oil exports again, while Houthi militants will continue to target Emirati and Saudi oil infrastructure. Even if negotiations can resurrect the moribund Joint Comprehensive Plan of Action, it could take months for the full impact of Iranian oil to filter through to global markets. In any scenario, oil faces choppy waters ahead.

This article first appeared in the Axco Flashpoints newsletter, which provides monthly analysis on country risk and geopolitics from our Global Risk team. You can sign up at