- Commodities trader Pierre Andurand said Russian oil is out of the market "for good."
- He said about 4 million barrels a day are now out of circulation since Russia's attack on Ukraine.
- Oil prices will need to reach $200 a barrel to keep demand down, Andurand told Bloomberg.
Famed French commodities trader Pierre Andurand sees oil prices hitting $200 a barrel this year – about twice the current level — as Russian crude leaves the market for good.
Andurand, who is known for his winning commodities bets in volatile times, told Bloomberg News that oil prices need to hit $200 to reduce demand and "balance the market" as Russia leaves a permanent hole in the supply.
He estimated 4 million barrels of oil per day have been sidelined since President Vladimir Putin's forces attacked Ukraine and the West reacted with a bevy of sanctions on the Russian economy and its leaders.
"I don't think that suddenly they stop fighting, the oil comes back," he told Bloomberg. "It's not going to be the case. The oil's going to be gone for good. We'll have to live with higher prices to keep demand down."
Recently, peace talks between Russia and Ukraine have shown signs of being positive, leading to a drop in oil prices. But on Thursday, Brent crude and West Texas Intermediate surged back past $100 per barrel after a Kremlin spokesperson denied a report about major progress toward a ceasefire.
For Andurand, though, he said it's "not about the ceasefire." He told Bloomberg the West is likely to maintain sanctions on Russia until it feels confident Putin will not launch an attack on another country, or until there's a new, trustworthy regime. And that could take a while.
To replace the hole in the market created by Russia, Andurand estimated the Middle East could perhaps increase production by 1.5 million barrels daily, still leaving a 2.5 million-barrel crater. To make up the difference, the world will need to find ways to reduce demand.
"We have to accept demand destruction," he said. "We have to save energy as much as we can."
His warning follows a similar but less gloomy report from the International Energy Agency on Wednesday. The energy watchdog said Western sanctions and lower demand for Russian oil could spark the "biggest supply crisis in decades."
According to the IEA, upwards of 2.5 million barrels per day of exports could be at risk, though any alleviation in the war could ease shortages.
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