The bank’s analysts warn that a worst-case Russian cut will push crude to $380 per barrel
Global oil prices could reach a “stratospheric” $380 per barrel if Western penalties prompt Russia to impose retaliatory output cuts, according to JPMorgan Chase analysts.
“The most obvious and likely risk with a price cap is that Russia might chose not to participate and instead retaliate by reducing exports,” the analysts wrote in a note seen by Bloomberg.
“It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side.”
In late June, US President Joe Biden announced plans to put an embargo on insuring ships transporting Russian oil, as part of sanctions against Moscow over its attack on Ukraine.
Earlier, the Group of Seven nations agreed to explore a possible price cap on Russian oil to limit Moscow’s ability to generate revenue from sales.
First introduce by US Treasury Secretary Janet Yellen, the idea was then taken up by the G7, which is considering an embargo on Russian seaborne crude unless it is purchased at or below a price to be agreed with international partners.
JP Morgan Chase experts noted that sanctions-hit Russia can afford to cut daily crude production by up to five million barrels without excessively damaging the economy, given Moscow’s robust fiscal position.
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https://ift.tt/2cY7Wgy 02, 2022 at 06:57PM
from RT – Daily news