Last week, the G7 countries, meeting at a summit, agreed on a price cap for the oil Russia, to further dry up the cash flow for Moscow, which uses it to finance its war machine. Since a sudden European embargo would cause a new surge in crude oil prices (+43% already for the Brent the North Sea since the beginning of the year), the Americans have proposed the idea of a complex price cap mechanism which – since direct price intervention is not possible – will involve carriers and private insurers. Tankers transporting crude from the Urals will no longer be able to be insured unless they have bought the Russian oil loaded in the hold below a certain price, which will be a price just a little above the cost of production. Japanese Prime Minister, Fumio Kishidaoffered a cap at about half the current price, around $50-$60.
Le Japanthem UNITED STATESle Canadathe United Kingdom, theGermanyFrance andItaly are currently thinking about implementing this plan. Today, the European Union, which decided in June on a gradual embargo on Russian oil, still sends, every day, to the Russia hundreds of millions of dollars to buy its black gold. The West intends to reduce these financial flows without crude oil prices flirting again, as in March, at the start of the war in Ukrainewith their 2008 records, at almost 150 dollars a barrel, after the decision of the United States and the United Kingdom to ban the import of Russian oil.
The new plan of the West to sanction Russia could, however, once again turn against them, it is estimated within the American bank JPMorgan; this is the risk “the most obvious and the most probable. »
“Stratospheric”
The team of Natasha Kaneva, head of the raw materials analysis division, warns that Russia could decide, in retaliation, to reduce its production by 5 million barrels per day, without this having any “excessive damage” on its economy, given its budgetary situation ” solid “. Such a response from the Kremlin would cause a historic boom in oil prices which could reach the level “stratospheric” of 380 dollars a barrel, according to the calculations of the bank which does not believe in a recession.
“Currently, we estimate that oil prices move about $25 a barrel for every 1 million barrel change in supply or demand, nearly double the 15 that prevailed before the invasion. Ukraine by Russia and four times more than the 9 dollars observed just before the start of the Covid, at the beginning of 2020”, can we read in a note sent last week. For example, if Russia were to withdraw another 3 million barrels per day from the market (just over 3 million are already under sanctionsoffset in part by an increase in production by the other members of OPEC+), North Sea crude prices should reach $190 a barrel (+$75 compared to the current price), before racing even more. , due to a threshold effect, in the case of the worst-case scenario of a cut of 5 million barrels.
Russian Deputy Prime Minister Alexander Novakalready warned last week that attempts by the G7 (which is also seeking the cooperation of the Chine and India) to cap Russian oil prices could lead to a market imbalance and push prices higher.
On Monday, Brent rose 2% to around 114 dollars a barrel (+45% since the start of the year). In Norway, a producing country, a strike by workers in the energy sector is expected to lead to the closure of three new hydrocarbon fields. According to the Norwegian Oil and Gas Association, this will result in a daily loss of oil production of 130,000 barrels.