JPMorgan is warning a spike in oil prices would likely come as a result of disrupted oil flows from Russia should the U.S. sanction it for hostile activities in Ukraine. Derailing Russia’s crude exports would result in a rise in Brent crude to easily reach $120 a barrel.
“Any disruptions to oil flows from Russia in a context of low spare capacity in other regions could easily send oil prices to $120,” wrote Natasha Kaneva, JPMorgan’s head of global commodities strategy, in the report.
Russia is one of the top three oil and natural gas producers in the world, producing roughly 11 million barrels of crude oil per day. And if Russian oil exports are cut in half, Brent oil prices would likely spike to $150 a barrel, which would be a record high for oil price, according to JPMorgan’s estimate. The current record is $147.50 a barrel set in July 2008.
The bank also said that even though oil flows are likely to increase, downgrades of economic growth forecasts from the bank imply a reduction of 500,000 barrels per day in global oil demand next year.
