If oil prices continue to rise, there is a possibility of a recession, analysts caution.

• If Russia responds to Europe's request for oil by withholding supply, oil prices could increase by $20 to $30 per barrel, according to Andy Lipow, president of Lipow Oil Associates.
• He stated on CNBC's "Squawk Box Asia" on Wednesday that his greatest fear is that the rapid increase in prices in Europe and Latin America will trigger a recession that will eventually impact China's ability to sell consumer goods globally.
• The complete ban on Russian energy imports in major consuming countries would "severely reduce and disrupt energy supply" and prices could "soar further into uncharted territory," according to Caroline Bain, chief commodities economist at Capital Economics.

If the U.S. imposes a ban on Russian oil, it could lead to an increase in oil and food prices, which could trigger a recession if the situation worsens.

If Russia responds to Europe's request for oil by withholding its supply, it could potentially increase oil prices by $20 to $30 per barrel, according to Andy Lipow, president of Lipow Oil Associates. Previously, Moscow had warned that it would cut off Europe's gas supplies if Western countries targeted its energy sector.

On Tuesday, after President Biden declared a ban on Russian fossil imports, U.S. crude surpassed $128 per barrel, and Brent exceeded $130 before giving back some gains. The U.K. and EU announced plans to phase out Russian fossil fuels, contributing to the recent price surge. Prices had been climbing in recent weeks, reaching highs not seen since 2008.

"My greatest fear is that the rapid increase in prices in Europe and Latin America will trigger a recession that eventually impacts the United States and China's ability to sell consumer goods globally," he stated on CNBC's "Squawk Box Asia" on Wednesday.

As per Goldman Sachs' statistics from 2021, Russia accounts for 11% of global oil consumption, 17% of global gas consumption, and 40% of Western European gas consumption.

A complete ban on Russian energy imports in major consuming countries would "severely reduce and disrupt energy supply," causing prices to "enter uncharted territory," according to Caroline Bain, chief commodities economist at Capital Economics.

According to Bain, inflation in advanced economies will end the year at approximately 5%, higher than the previously forecasted 2.4%, due to the drop in households' spending power and power rationing in Europe, which will push the euro-zone into recession.

‘Global pariah’

According to Goldman Sachs Chief Economist Jan Hatzius, while theoretically oil flows could be rearranged to ease the supply shortage in the West, it may not be feasible in practice.

According to a March 6 note, if Western countries decrease their purchase of Russian oil, China and India may increase their intake of Russian oil, resulting in less Saudi and other oil being sold to the West.

Hatzius pointed out that the "rearrangement of the deck chairs" is not ideal due to several factors, including increased transport costs and technical difficulties, as well as the reluctance of China and India to increase their imports and payments sharply at a time when Russia is facing global isolation.

Goldman predicts that a sustained $20 increase in oil prices will decrease real GDP by 0.6% in the euro zone and negatively impact consumers' living costs.

On Wednesday, Kpler's lead oil analyst Matt Smith stated on CNBC that imposing "self sanctions" would intensify the stress in energy markets.

Even before the sanctions were announced, I believe that many U.S. companies would have been hesitant to purchase Russian crude oil products, as seen with Shell's experience of being criticized for buying Russian oil at discounted rates. After facing backlash, Shell later pledged to stop all purchases of Russian oil and gas.

"Self sanctioning is having as much impact as the sanctions themselves, as evidenced by the halted buying," Smith said.