Global oil prices could reach a “stratospheric” $380 a barrel if Russia retaliates to U.S. and Western sanctions with cuts in crude oil, JPMorgan Chase & Co. analysts warn.
The Group of Seven’s latest ammunition against Russia for its unprovoked war in Ukraine has been to cap the price of Russian oil.
Russia is in a relatively robust financial position that would permit it to cut daily crude oil production by 5 million barrels a day, Bloomberg reports JPMorgan analysts as writing in a client note.
“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 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.”
President Vladimir Putin on June 30, 2022 raised the stakes in its economic war with the West and its allies with a decree that seized full control of the Sakhalin-2 gas and oil project in Russia’s far east, a move that could force out Shell and Japanese investors.
The decree, signed on Thursday, creates a new firm that wrenched all rights and obligations of Sakhalin Energy Investment Co., in which Shell and two Japanese trading companies Mitsui and Mitsubishi hold just under 50%.
There are 15 major global oil and gas companies, including Chevron, Exxon Mobil and Shell, that do business in the Sakhalin Islands in the far reaches of northeastern Russia.
© 2022 Newsmax Finance. All rights reserved.