Global oil prices could hit an eye-wateringly high of $380 a barrel if Vladimir Putin responds to sanctions with cuts to crude oil output, financial experts have warned.
JPMorgan Chase analysts fear the ‘stratospheric’ rise, which would almost quadruple the current price of a barrel of Brent crude, could be fuelled by a retaliation against continued US and European penalties levied against Russia.
Despite efforts from G7 leaders to place a market cap on the price of Russian oil, the eastern state could drop daily crude production by five million barrels without excessive damage to their economy, financial analysts have concluded.
The impact of such a severe drop in the supply of oil would have a devastating ripple effect for both global markets and consumers.
JPMorgan warned a three million barrel cut to daily supplies would push London’s prices of crude to around $190 a barrel, with the doomsday scenario of a reduction of five million a day meaning prices surge to $380 a barrel, reports Bloomsberg.
‘The most obvious and likely risk with a price cap is that Russia might choose not to participate and instead retaliate by reducing exports,’ the analysts argued.
‘It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side.’
JPMorgan warned a three million barrel cut to daily supplies would push prices of crude to around $190 a barrel, with the doomsday scenario of a reduction of five million a day meaning prices surge to $380 a barrel, reports Bloomsberg
JPMorgan Chase analysts fear the ‘stratospheric’ rise, which would almost quadruple the current price of a barrel of Brent crude, could be fuelled by a retaliation against continued US and European sanctions levelled against Russia
Motorists can currently expect to pay around 191p per litre according to data from the AA
The International Energy Agency (IEA) stated Russia’s crude oil output rose to around 10.55 million barrels a day in May.
Despite western sanctions, Vladimir Putin’s coffers were given a $20billion boos that month as surging prices saw Russia generate an extra $1.7bn compared to April.
The IEA further warned that global oil supplies could ‘struggle to keep pace with demand’ in 2023 if sanctions tightened on Russia.
The price of a barrel of crude oil currently sits just shy of $120 a barrel, which is almost double the price it was this time last year.
The OPEC oil cartel and allied producing nations decided Thursday to increase production of crude oil, but the amount will likely do little to relieve high prices at the pump and energy-fueled inflation plaguing the global economy.
U.S. crude oil prices fell 2.4 percent on the day, but are still up 42 percent in 2022.
It comes as the latest numbers show that the average price of a litre of petrol at UK forecourts reached a new high of 191.4p on Thursday, while diesel rose to 199.1p.
RAC fuel spokesman Simon Williams said the rise in the price of petrol illustrates ‘the biggest retailers’ resistance to reduce their pump prices in line with the lower wholesale cost of unleaded’.
He went on: ‘Rather than passing on some of the savings they are benefiting from, they are clearly banking on the wholesale market moving up again which is disappointing for drivers who are desperate to see an end to ever-rising prices.
‘Sadly, there no longer seems to be any appetite among the big four supermarkets to drive customers into their stores with lower pump prices.
‘We question whether we will ever see much competition between supermarkets over fuel again, let alone a so-called ‘price war”.
The wholesale price includes product cost and fuel duty. The retail price includes product cost, fuel duty, delivery and distribution, retail margin (forecourt costs and retailer’s profit) and VAT.
Petrol retailers have come in for sharp criticism for a ‘classic example of rocket and feather pricing’, with pump prices not mirroring wholesale costs.
Despite efforts from G7 leaders to place a market cap on the price of Russian oil, the eastern state could drop daily crude production by five million barrels without excessive damage to their economy, financial analysts have concluded
Data from the Organisation for Economic Co-operation and Development from April 2021 until April 2022 shows U.S. inflation has been rising steadily above all other nations
The concept of rocket and feather pricing for fuel involves retailers quickly hiking pump prices when the cost of oil rises, but being slow to pass on the benefits of decreases in oil prices.
The RAC claimed significant reductions in wholesale costs for petrol mean companies have a ‘clear opportunity’ to stop continuously hiking pump prices.
And drivers across Britain have been letting front line workers know about their feelings towards the retailers’ unwarranted price hiking.
Jack Cousens, head of roads policy at the AA, said: ‘With Wimbledon well under way, drivers may be forgiven for borrowing the iconic rant from John McEnroe as they pull up to the pump – ‘You cannot be serious!’.
Asked yesterday if another fuel duty cut could be on the cards, a spokesman for Boris Johnson highlighted the 5p cut in March ‘which we’ve repeatedly called on all retailers to pass on to consumers’.
Pressed on the subject he added: ‘Well, as the Chancellor said before, we obviously keep the support we provide to the public under review. And that obviously remains the case.’
The Competition and Markets Authority launched a ‘short and focused review’ of fuel prices earlier this month after a request by Business Secretary Kwasi Kwarteng.
Prices at UK forecourts reached a new high of 191.4p on Thursday, while diesel rose to 199.1p, the latest 24-hour period figures are available for. Pictured: BP Petrol station at Reading Services this week
A 5p per litre reduction in fuel duty implemented by the Treasury in March has not stopped prices from soaring.
Retailers hit back at accustions of ‘rocket and feather pricing’, claiming to have been ‘unfairly scapegoated’ for the price rises and arguing that the 5p saving had been passed on.
Gordon Balmer, executive director of the Petrol Retailers Association, commented: ‘The briefings provided by Government spokespeople to the media indicate that ministers do not understand how fuel prices are set.
‘We have contacted the secretary of state for business on multiple occasions offering to meet and explain fuel pricing. However, we are yet to receive a response.’
The furore over petrol pricing has prompted fuel thefts at forecourts to surge by up to 61 per cent as drivers struggle to afford spiralling pump prices.
Industry bosses revealed the worrying trend yesterday, with about 50,000 ‘drive-offs’ and ‘no means to pay’ incidents happening monthly across the UK.
The average value of each fuel theft has surged from £53.28 to £78.19 and Mr Balmer said that it could cost the industry £25 million a year.
He said ‘drive-offs’ – where a motorist fills up and makes no attempt to pay – and people being unable to pay had collectively surged 61 per cent this year compared with the same period last year. He said: ‘In terms of fuel thefts, it’s going through the roof.
‘We also then have “no means to pay” incidents, when somebody fills up and then they say they have left their wallet or purse at home and can’t pay. That comes in at about another £16 million.
He said police refuse to deal with the incidents valued at less than £100.
