The war in Ukraine that crosses with speculation has had the effect of a rise in the cost of oil which, however, could only be an appetizer of what could happen in the coming years. For example, a report by the American bank JP Morgan foresees a very dark future, coming to hypothesize an oil price of 380 dollars per barrel, more than triple compared to today, and a price of gasoline at the pump stably around 4 euros per barrel. liter.
The increase in Opec + production
The cartel of oil exporting countries, at the beginning of June, decided to increase production up to 648 thousand barrels per day for the months of July and August, after having so far raised the pace by 432 thousand barrels per day each month to recover the declines. recorded during the pandemic. The adjustment was expected to stem the increasing prices reached by oil, around 120 dollars a barrel, which are responsible for the increase in fuel costs and are contributing to the rising inflation in the US and Europe.
The question of the price cap
As is well known, Italy is pushing hard within the EU to put a ceiling on the price of energy. “Putting a ceiling on the price of fossil fuels imported from Russia – said Draghi – has a geopolitical objective as well as an economic and social one, because even when energy prices drop, it is unthinkable to return to having the same dependence on Russia. And we must eliminate one of the main causes of inflation ”. “In the current situation – she explained – there are short-term needs that will require large investments in gas infrastructure for developing countries and beyond. We will have to make sure that they can then be converted to the use of hydrogen, a way to reconcile short-term needs with long-term ones ”.
JP Morgan’s bleak forecast
However, sanctions and price caps may not be enough and indeed trigger an even more frightening price increase process. A Bloomberg article reports the worrying forecast: the price of oil could reach the stratospheric threshold of 380 per barrel if US and European sanctions push Russia to inflict retaliatory cuts on crude oil production.
“The nations of the Group of Seven – it says – are developing a complicated mechanism to limit the price reached by Russian oil in an attempt to tighten the screws on Vladimir Putin’s war machine in Ukraine. But given Moscow’s strong fiscal position, the nation can afford to reduce daily crude oil production by 5 million barrels without unduly damaging the economy, JP Morgan 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 in daily supplies would push London benchmark crude oil prices to $ 190, while the 5 million worst-case scenario could mean “stratospheric” crude at $ 380, analysts wrote.
The most obvious and probable risk with a price cap is that Russia may choose not to participate and instead react by reducing exports, ”the analysts wrote. “The government is likely to retaliate by cutting production as a way to inflict pain on the West. The rigidity of the global oil market is on Russia’s side “.