ERHC Energy Inc (ERHE)

[YankeMike]

$380 oil? JPMorgan sees a scenario where that's possible

Shortly after Russia invaded Ukraine, global oil prices surged above $139 a barrel. They were last trading below $113. But strategists at JPMorgan Chase see a possible scenario in which "stratospheric" $380 crude could be on the cards, making recent gains look puny by comparison.

Step back: Last week, G7 leaders agreed to hash out a plan to cap the price of Russian oil. This would allow the country's discounted barrels to keep hitting the market but reduce Moscow's revenue.

Details are still being nailed down. But in theory, to receive insurance from Western companies for their cargoes, customers like China and India would agree to pay only $50 to $60 per barrel.

That would curb income for the Kremlin, which has estimated the price of its export barrels will top $80 by the end of 2022.

But JPMorgan's team, including strategist Natasha Kaneva, warns that Russia could retaliate by intentionally curbing oil output as it's done with natural gas. That would send prices through the roof. If it slashed production by 3 million barrels per day, the bank forecasts prices could jump to $190 per barrel. In a "worst-case scenario" of a cut of 5 million barrels per day, prices could hit $380.

"If the geopolitical situation requires, it now appears more likely that export cuts could be used as leverage / policy tool, in our view," Kaneva and colleagues wrote this month.

https://www.cnn.com/2022/07/05/investing/premarket-stocks-trading/index.html