Brent oil prices could rise to $380 per “stratospheric” barrel in the “extreme scenario” where Russia cuts oil production by 5 million barrels per day (bpd) by 7 million barrels per day (bpd). (G7), JP Morgan analysts said in a July 1 note.
The G7 economic powers agreed last week to investigate a ban on Russian oil sold above a certain price, in an effort to limit Moscow’s ability to finance its invasion of Ukraine, which it describes as a “special operation”.
“A price cap of $50-60 per barrel will likely serve the G7 goals of reducing Russia’s oil revenues and keeping the barrels flowing,” the bank said.
He added that “the most obvious and likely risk” is Russia’s failure to cooperate and retaliate for a reduction in oil exports, adding that Moscow could reduce production by up to 5 million barrels “without unduly damaging its economic interests”.
“Given the high level of stress in the oil market, a 3.0 million bpd drop could cause the global price of Brent to jump to $190 a barrel, while in the worst-case scenario, a 5 million bpd cut could drive the price of oil, JP Morgan says. He said it went up to $380 per barrel.
Russian Deputy Prime Minister Alexander Novak said last week that attempts to limit the price of Russian oil could cause an imbalance in the market and cause prices to rise.
JP Morgan also envisioned alternative scenarios where China and India do not cooperate with the G7 on the price cap, or where Russia completely redirects exports from west to east but loses pricing power.
source: Noticias
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