Oil giants have been exiting their investments in Russia after the country initiated military action in Ukraine. The conflict has caused oil prices to soar as fears have increased regarding supply shortages. The exit from international oil firms is likely to cause prices to continue to rise, experts said.

“Oil giants are mostly falling in line and have signalled that as the crisis in Ukraine worsens, they will work towards ending ties with Russia…Russia is a key supplier of energy to the world and the abandonment of using their supplies will keep oil and gas prices heading much higher,” Edward Moya, senior market analyst for OANDA said.

Political pressure for economic ties to Russia to be cut has grown more intense over the past week as the conflict continues. Moya believes that pressure will likely grow on Total, a French oil and gas giant, to exit in line with announcements from fellow oil majors bp, Exxon, and Shell.

“Oil majors have been having a wonderful past few quarters as they have benefited from steady increase with crude prices. They have been able to buyback shares, raise dividends, and post record earnings, so the exit of Russia for many is a hit that they will be able to handle,” Moya said.

In the short-term, Russian producers are likely to be able to maintain production levels, Louise Dickson, oil markets analyst for Rystad Energy explained, but the medium to long-term outlook is significantly murkier.

source : https://www.oilandgasmiddleeast.com/