Does the outbreak of Russia-Ukraine war mean oil prices have peaked?

Since February 2022, Brent crude has soared close to the $100 mark as fears of a war between Russia and Ukraine continue to mount.As global oil supplies continue to lag strong demand growth, foreign institutions such as Bank of America and jpmorgan chase expect Brent prices to rise above $120 in the event of war.However, since 1970, Russia (the Soviet Union until 1991) has waged five major wars, and all three wars against neighboring countries have seen oil prices peak during each major bull market, with the exception of two wars against Chechnya in the Russian Federation in 1994 and 1999.(Photo source: Soochow Securities) For specific reasons, Soochow Securities believes that: 1) As a major oil producer, the rise in oil prices has strengthened Russia’s national strength, which is also the basis for its choice of sending troops to foreign countries when oil prices are high;2) Secondly, as a major consumer of crude oil, the rising oil price aggravates inflation in western countries and easily causes domestic people’s dissatisfaction with the government, thus reducing the external resistance for Russia to send troops.3) But too much can backfire. Oil prices and high inflation erode consumer demand in the West, while domestic voter discontent can force democratic governments to put pressure on Opec.That is why, after every Russian foreign war, the oil market has experienced a sharp liquidation, either in the collapse of demand or the release of supply.Source: Tongshun – Jietubao

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