Global oil prices may hit $380 a barrel if Russia were to announce crude oil cuts in retaliation for the US and European curbs.
This warning was sounded out by JPMorgan Chase & Co. According to JPMorgan analysts currently Russia enjoys a strong financial position and it can afford to slash daily crude production by 5 million barrels.
It was after Russia’s invasion of Ukraine that the Western allies led by the US imposed several sanctions, and worked out a complicated mechanism to cap the price fetched by Russian oil.
The analysts noted that Russia’s crude production cuts could be disastrous for the world, as a cut of 3 million barrels will elevate London crude prices to $190. In the worst-case scenario, if the output is cut by 5 million barrels, the price could reach as high as $380 a barrel.
“The most obvious and likely risk with a price cap is that Russia might choose retaliate by reducing exports as a way to inflict pain on the West,” wrote the analysts.