By Alexander Miller, consultant in energy markets, for Eurasia Business News – July 2, 2022
If the G7 countries introduce marginal prices for Russian oil, this will lead to a reduction in its supply, according to the American bank JPMorgan Chase & Co. In this context, oil prices may rise to $ 380 per barrel, predicts the bank’s analyst Natalia Kaneva.
In her opinion, Russia’s “strong financial position” allows it to reduce daily crude oil production by 5 million barrels “without undue damage to the economy.” However, “for much of the rest of the world, the results could be disastrous,” according to JPMorgan.
According to analysts, the reduction in daily oil supplies by 3 million barrels will raise oil prices to $ 190. The worst-case scenario is called a decrease in supplies by 5 million barrels, which will lead to a rise in oil prices to the “stratospheric” $ 380.
“The most obvious and probable risk of limiting prices (for Russian oil) is that Russia may abandon this option and instead take retaliatory measures by reducing exports. It is likely that the government may retaliate by cutting production to hurt the West. The density of the world oil market is on the side of Russia, “analysts are convinced (quoted by Bloomberg).
Read also : Gas prices hit $ 2,240 per thousand cubic meters, amid EU sanctions
In June, G7 leaders instructed their ministers to study the introduction of marginal prices for Russian oil and gas. This topic has already been discussed with China and India, as well as with South Korea. However, China is an ally of Russia. Morever, India is not a supporter of Western policy towards Russia. Moscow has traditionally good relations with New Dehli.
The United States expects to move forward in discussing the issue in July. According to Reuters, the United States will negotiate with the countries of Latin America and Africa.
The plans of Western countries to limit the cost of Russian energy carriers are a political decision that will cause an imbalance in the market and the growth of quotations, said the Russian Deputy Prime Minister Alexander Novak. He cited the example of the EU embargo on the supply of Russian coal, which led to an increase in prices for it in Europe, because due to the lack of working nuclear power plants in Germany, thermal power stations needed more coal to produce heat and power.
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