Analysts believe that a decision by Western partners on Saturday to prohibit select Russian banks from using the SWIFT payments system will push oil prices well beyond $100 a barrel as risks associated with dealing Russian oil rise.
The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a secure communications system that allows for quick cross-border payments and smooth international trade.
According to traders and economists, the new Western sanctions will seriously affect Russian shipments of all commodities, including oil, metals, and grains.
According to at least ten oil and commodities merchants who spoke to Reuters on the condition of anonymity, Russian commodity flows to the West will be significantly affected or blocked for days, if not weeks, until exemptions are clarified.
Brent oil prices will almost certainly recover to their highs of $105, according to Amrita Sen of consultancy Energy Aspects.
“However, I wouldn’t rule out a swift move to $110 per barrel,” she continued.
When Russian soldiers invaded Ukraine on February 24, oil prices rose above $100 a barrel for the first time since mid-2014, with Brent jumping above $105 a barrel for the first time since mid-2014.
By Friday, the price of a barrel had fallen below $100.
“While attempting to exempt energy transactions, SWIFT can still cause significant disruption to energy trade flows in the near term, at least until buyers switch to alternatives like Telex or other systems,” Sen said, adding that without exemptions, trade on other commodities will be much more difficult.
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