Investing.com – Le oil has retreated from its early June highs, but remains firmly anchored above $100, and continues to display a bullish technical trend, amid a fundamental backdrop where many factors could kick-start the upside to new highs.
One of the key catalysts that could cause oil prices to soar even further is potential retaliation from Russia if the G7 manages to put in place a Russian oil price cap mechanism, as recently discussed.
In an analytical note published this weekend, analysts addressed this topic, leading to a strongly bullish forecast for oil in such a scenario:
“The most obvious and likely risk with a price cap is that Russia could choose not to participate and retaliate by cutting exports,” the bank’s analysts wrote.
“It is likely to retaliate by cutting production to inflict pain on the West. The narrowness of the world oil market is on Russia’s side” they continue.
As for the impact on oil prices, JP Morgan analysts estimated that a 3 million barrel reduction in daily supply would push the London benchmark crude price to $190.
The bank also estimates that in the worst case, a reduction of 5 million barrels could translate into a “stratospheric” crude price of $380.