The rally in crude oil prices may have a long way to go, warns one top strategist.
"It is not unfathomable for prices to rocket to $200 a barrel by summer, spur a recession and end the year closer to $50 a barrel ($200 call options have been bid). To be clear, this is not our base case, but such a scenario does not sound implausible today. Two weeks ago, such a notion would have been ludicrous. Brent traded in a $20 range over the past 24 hours. Nothing sounds crazy, anymore," said RBC Capital Markets analyst Michael Tran.
On Wednesday, Brent crude oil prices traded around $127 a barrel as traders digested the Biden administration's ban of imports of Russian oil, liquefied natural gas and coal in response to the country's war on Ukraine.
Oil prices have surged roughly 31% since Russia's invasion of Ukraine as the U.S. and its allies have slapped the country with debilitating sanctions.
Adds Tran, "This is the tightest fundamental backdrop in years and the developments in Russia/Ukraine have ignited a market that was already a coiled spring."
The spiraling price of crude has begun to feed its way into the prices consumers pay at the pump.
The national average price of gasoline has surpassed $4 a gallon in the U.S. for the first time since 2008, according to data from GasBuddy. Prices at the pump have spiked 41 cents in the last seven days alone.
Gas prices in California are the highest in the country at an average of $5.28.
Material gas price inflation has some on Wall Street concerned about a potential sharp slowdown in U.S. economic growth.
"Consumers are facing a bit of a doubleheader of headwinds in less stimulus and higher prices, particularly at the pump but also in food and used and new cars. So that is going to tamp down consumer demand into this year. Then we have the Fed raising interest rates. So we have three things conspiring to reduce production this year and weaken economic growth," said Advisors Capital Management portfolio manager Joanne Feeney on Yahoo Finance Live.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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