Bank analysts warn a worst-case Russian cut will push crude to $380 a barrel
World oil prices could reach a “stratospheric” $380 a barrel if Western sanctions prompt Russia to impose retaliatory production cuts, analysts at JPMorgan Chase say.
“The most obvious and likely risk with a price cap is that Russia could choose not to participate and retaliate by reducing exports,” the analysts wrote in a note seen by Bloomberg.
“It is likely that the government could retaliate by cutting production in order to inflict pain on the West. The tightness of the global oil market is on Russia’s side.
At the end of June, US President Joe Biden announced his intention to put an embargo on the insurance of ships carrying Russian oil, as part of the sanctions against Moscow for its attack on Ukraine.
Earlier, the Group of Seven countries had agreed to explore a possible price cap on Russian oil to limit Moscow’s ability to generate revenue from sales.
First put forward by US Treasury Secretary Janet Yellen, the idea was later taken up by the G7, which is considering an embargo on Russian maritime crude unless it is purchased at or below a price to be agreed with international partners.
Experts at JP Morgan Chase have noted that sanctions-hit Russia can afford to cut its daily crude output by up to five million barrels without unduly damaging the economy, given Moscow’s strong fiscal position.
For more stories on economics and finance, visit RT’s business section
You can share this story on social media: