The price of oil may rise to an all-time high of $380 per barrel if the United States and European sanctions lead Russia to reduce its crude supply in retaliation.
The Group of Seven (G7) leaders recently discussed a plan to cap the price of Russian oil in order to put more pressure on Moscow.
JPMorgan analysts stated that Moscow can afford to reduce daily crude production by 5 million barrels without significantly harming the economy given the country’s strong budgetary situation. However, the outcomes might be terrible.
According to the bank’s experts, a daily supply reduction of 3 million barrels would cause benchmark London crude prices to rise to $190, while, a reduction of 5 million barrels would result in “stratospheric” prices of $380 a barrel.
“The most obvious and likely risk with a price cap is that Russia might choose not to participate and instead retaliate by reducing exports,” the analysts added.
