The energy market could have been disrupted in the 1970s by Russia's invasion of the Ukraine.
One of the world's largest oil exporters is Moscow. Sanctions by the U.S. and allies on Russia's financial system has set in motion a backlash against Russian crude from banks, buyers and shippers.
Even though the U.S. and other countries have not imposed sanctions on Russian energy, there could be a large loss of Russian barrels in the market. The country exports about 7.5 million barrels of oil and refined products a day.
This is going to be a big disruption in terms of transportation, and people are going to be scrambling for barrels. There is a logistics crisis. This could be on the scale of the 1970s if it is a payment crisis.
He said that strong communications between governments and the industry could head off a worst case scenario.
About half of Russia's exports go to NATO.
Even though energy was not specifically sanctioned, there are still sanctions working to keep Russian oil out of the market. Buyers are wary of Russian oil due to the fact that banks, ports and shipping companies do not want to run afoul of sanctions.
This could be the worst crisis since the Arab oil embargo and the Iranian revolution of the 1970s. The events were major oil shocks.
Middle Eastern oil producers cut off supply from the US and other countries in 1973. Americans lined up at gas stations to buy gasoline when oil was in short supply. The overthrow of the Shah of Iran was one of the shocks.
The oil majors are leaving their Russian ventures. The price of Russia's Ural crude has plummeted compared to the international benchmark.
The big reputational issue is the companies not wanting to do business with Russia. Hundreds of people are employed in Russia by oil companies that are giving up major investments.
Putin destroyed the economy he built for 22 years, an economy that was integrated with the global economy. He said that Russia is unplugged from the global economy.
The market is already tightly supplied, so the disruption is coming. The current production plans of the alliance between OPEC, Russia and others were decided on Wednesday. They are returning about 400,000 barrels a day until they reach their goal.
The spike in European natural gas prices has added to the pain of Russia's customers. Europe is the biggest customer of Russian oil and gas.
The price of oil was going up when Russia entered Ukraine last week. The price of oil was above $116 per barrel before it retreated amid speculation that Iran may reach a deal to re-enter its nuclear deal. It could bring 1 million barrels of Iranian oil back to the market.
It's difficult to tell how much Russian oil will be affected. There are no sanctions on energy, but they are on the table.
The annual energy conference will be hosted by Markit next week. Executives from many energy companies will be speaking at the conference, which is expected to focus on how Russian barrels will be replaced.
John Kilduff is a partner with Again Capital. According to Bank of America, every million barrels lost from the market, the price of Brent could rise by $20 per barrel.
Kilduff thinks that Russian oil will continue to flow to China. Beijing will not join the sanctions against Russia.
Analysts say oil that is carried by ships is more likely to be wanted by buyers.
We're cutting off the oil ourselves. It is a buyers strike, not suppliers acting out. The Russians are not going to sell it if you can finance it and you can't get paid for it.
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