Oil prices surge as Russia-Ukraine crisis escalates

The oil and gas terminal at the Port of Odessa in Odessa, Ukraine, on Saturday, Jan. 22, 2022.

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The Biden administration said last week that as many as 7,000 additional troops have joined Russia, which has built up 150,000 troops along its border with Ukraine.

The military tensions have sparked concerns that Russia may be preparing to invade Ukraine, triggering fears of a repeat of the Kremlin's illegal annexation of the peninsula.

Last year, Russia was the largest supplier of natural gas and oil to the European Union.

Since the beginning of the year, crude prices have increased more than 20% and have risen more than 80%. The gains can be attributed to other factors.

Lipow said that oil could go to $110 per barrel if the crisis worsened.

If Russian oil supplies are cut off, we could see oil prices rise another $10 to $15 a barrel, putting the price of oil at about $110 a barrel, he told CNBC.

The market will rally on an invasion of Russian troops into Ukraine proper, and then it will wait to see where the supplies come from.

More than 1 million barrels a day of Iranian crude could return to the market if a deal is reached to revive Iran's nuclear agreement.

Lipow said markets would look toward Saudi Arabia, the United Arab Emirates and Kuwait for spare capacity, which he estimated to be 3.5 million to 4 million barrels a day.

The firm estimated that tensions in the Middle East have added $10 to $15 per barrel to oil prices.

If we continue to see tensions escalate, then that will cause various supply disruptions to Russia's oil and gas supplies, which will cause upward pressure on oil prices and hurt Asia's largest economies from a production point.

Most of Asia's largest economies are net oil importers.