(Bloomberg) -- Global oil prices could reach a “stratospheric” $380 a barrel if US and European penalties prompt Russia to inflict retaliatory crude-output cuts, JPMorgan Chase & Co. analysts warned.
Most Read from Bloomberg
Crypto Meltdown Claims Rolex and Patek Philippe as Victims
JPMorgan Sees ‘Stratospheric’ $380 Oil on Worst-Case Russian Cut
US Will Face High Gas Prices ‘as Long as It Takes,’ Biden Says
Netflix Crashes After ‘Stranger Things 4’ Finale Release
The Wheels Have Come Off Electric Vehicles
The Group of Seven nations are hammering out a complicated mechanism to cap the price fetched by Russian oil in a bid to tighten the screws on Vladimir Putin’s war machine in Ukraine. But given Moscow’s robust fiscal position, the nation can afford to slash daily crude production by 5 million barrels without excessively damaging the economy, JPMorgan analysts including Natasha Kaneva wrote in a note to clients.
For much of the rest of the world, however, the results could be disastrous. A 3 million-barrel cut to daily supplies would push benchmark London crude prices to $190, while the worst-case scenario of 5 million could mean “stratospheric” $380 crude, the analysts wrote.
“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. “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.”
Most Read from Bloomberg Businessweek
The Lottery Lawyer Won Their Trust, Then Lost Their Mega Millions
Did Razzlekhan and Dutch Pull Off History’s Biggest Crypto Heist?
How Generations of Black Americans Lost Their Land to Tax Liens
Gangs Are Fake-Killing People in India for Insurance Payouts
You Can Give People What They Want. Or You Can Give Them Web3
©2022 Bloomberg L.P.Click Here To Get Funded!