Citigroup has today increased its 2014 forecasts for Brent crude to US$109 per barrel, from US$104Citigroup has increased its 2014 forecasts for Brent crude to US$109 per barrel, from US$104

You don’t have to be a prince to have an opinion on the crisis in Ukraine, or the possible geopolitical repercussions of sanctioning Russia.

Another opinion, coming from Citigroup, is that Russia has added “a new front of geopolitical risk” for oil markets.

Citigroup has today increased its 2014 forecasts for Brent crude to US$109 per barrel, from US$104, and lifted its estimate for 2015 to US$105 from US$95.

The investment banks explains the crisis is among the bullish geopolitical factors that have countered otherwise bearish fundamentals in the oil market.

According to Citi, the risks in the oil market were “weighted to the downside” at the start of this year – with Libya, Iran and Iraq all set to add significantly to supplies – but the Russia/Ukraine crisis introduced large, completely unexpected risks.

Discussing the prospect of sanctioning against Russia, Citi analyst Seth Kleinman says the ‘West’ and Russia are set for a relationship of ‘mutually assured destitution’.

“Russian energy exports are so big that any talk of Iran-style sanctions being imposed on them puts the market in the difficult position of trying to value a (hopefully) small probability/massive impact event,” Kleinman said in a note.

“This introduces an incremental risk premium to the market, but it is also going to impact physical markets and flows in a bullish fashion.”

The analyst adds: “The unmatched size of Russia’s energy exports and the threat of Iran-style sanctions means both sides are playing a very high stakes game,” analyst Seth Kleinman said in a note.

“Russian oil and gas exports are so large, that even the threat of disruption is enough to warrant a significant risk premium in the market, and makes precautionary stockpiling (as seems to be happening in China) a reasonable response to the recent tensions.”

Today, in London trading, Brent Crude futures were up 20 cents at US$109.90 whilst West Texas Intermediary futures gained almost 70 cent to change hands at US$103 per barrel.