By Jacob Thorburn for MailOnline
Global oil prices could reach an obvious high of $ 380 a barrel if Vladimir Putin responds to sanctions with cuts in crude oil production, financial experts have warned.
JPMorgan Chase analysts fear that the ‘stratospheric’ rise, which nearly quadruples the current price of a barrel of Brent crude oil, could be fueled by continued retaliation against US and European fines levied against Russia.
Despite efforts by G7 leaders to put a market capitalization on the price of Russian oil, the eastern state could reduce daily crude production by five million barrels without undue damage to their economy, financial analysts have concluded.
The impact of such a severe drop in oil supply will have a devastating ripple effect on both global markets and consumers.
JPMorgan has warned that a reduction of three million barrels in daily stocks would push London’s crude oil prices to around $ 190 per barrel, with the doomsday scenario of a reduction of five million per day meaning prices up to $ 380 per barrel rises, reports Bloomsberg.
“The most obvious and likely risk with a price limit is that Russia could choose not to participate and rather take revenge by reducing exports,” the analysts argued.
‘It is likely that the government can take revenge by reducing output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side. ‘
JPMorgan has warned that a reduction of three million barrels in daily stock prices of crude oil will push up to about $ 190 per barrel, with the doomsday scenario of a reduction of five million per day meaning prices rise to $ 380 per barrel, reports Bloomsberg
JPMorgan Chase analysts fear that the ‘stratospheric’ rise, which nearly quadruples the current price of a barrel of Brent crude oil, could be fueled by retaliation against continued US and European sanctions imposed on Russia.
Motorists can currently expect to pay around 191p per liter according to data from the AA
The International Energy Agency (IEA) has stated that Russia’s crude oil output rose to about 10.55 million barrels per day in May.
Despite Western sanctions, Vladimir Putin’s coffers cost $ 20 billion that month, as rising prices saw Russia generate an extra $ 1.7 billion compared to April.
The IEA further warned that global oil supplies could ‘struggle to keep up with demand’ by 2023 if sanctions against Russia intensify.
The price of a barrel of crude oil is currently only shy of $ 120 per barrel, which is almost double the price it was this time last year.
The OPEC oil cartel and allied producing countries decided on Thursday to increase crude oil production, but the quantity is unlikely to do much to highlight high prices at the pump and energy-driven inflation plaguing the world economy.
U.S. crude oil prices fell 2.4 percent on the day, but are still 42 percent higher in 2022.
This is because the latest figures show that the average price of a liter of petrol at British courts reached a new high of 191.4p on Thursday, while diesel rose to 199.1p.
Simon Williams, RAC fuel spokesman, said the rise in the petroleum price illustrates’ the biggest retailers’ resistance to lowering their pump prices in line with the lower wholesale cost of lead-free ‘.
He added: ‘Rather than pass on some of the savings they are benefiting from, they are clearly aiming for the wholesale market to move upwards again, which is disappointing for managers who are desperate to see an end to rising prices .
‘Unfortunately, there is apparently no longer any appetite among the big four supermarkets to chase customers with lower pump prices into their stores.
“We question whether we will ever again see a lot of competition between supermarkets over fuel, let alone a so-called ‘price war’.”
The wholesale price includes product costs and fuel tax. The retail price includes product costs, fuel tax, delivery and distribution, retail margin (court costs and retailer profits) and VAT.
Petrol retailers have been sharply criticized for a ‘classic example of rocket and feather prices’, with pump prices not reflecting wholesale costs.
Data from the Organization for Economic Co-operation and Development from April 2021 to April 2022 show that US inflation has been steadily rising above all other nations
The concept of rocket and feather prices for fuel implies that retailers are rapidly increasing pump prices when the cost of oil rises, but are slow to pass on the benefits of declines in oil prices.
The RAC claimed that significant reductions in wholesale costs for petroleum mean that companies have a ‘clear opportunity’ to prevent pump prices from rising steadily.
And managers across Britain have been lining up front-line workers ‘feelings about retailers’ unwarranted price increases.
Jack Cousens, head of road policy at the AA, said: ‘With Wimbledon well underway, drivers can be forgiven for borrowing John McEnroe’s iconic outburst as they pull over to the pump -‘ You can not be serious ! ‘
Asked yesterday whether there could be another fuel tax cut on the cards, a Boris Johnson spokesman stressed the 5p cut in March “which we have repeatedly called on all retailers to pass on to consumers” .
Under pressure on the subject, he added: ‘Well, as the Chancellor said before, we naturally keep in mind the support we offer to the public. And that, of course, remains the case. ‘
The Competition and Market Authority launched a ‘short and focused review’ of fuel prices earlier this month following a request by Kwasi Kwarteng, business secretary.
Prices at UK courts reached a new high of 191.4p on Thursday, while diesel rose to 199.1p, the latest 24-hour period figures are available for. In the photo: BP filling station at Reading Services this week
A 5p per liter reduction in fuel taxes implemented by the Treasury in March did not stop prices from soaring.
Retailers slammed back on accusations of ‘rocket and feather prices’, claiming they were ‘unfair scapegoats’ for the price increases, arguing that the 5p savings had been passed on.
Gordon Balmer, executive director of the Petroleum Retailers Association, said: ‘The information sessions provided by government spokespersons to the media indicate that ministers do not understand how fuel prices are set.
‘We contacted the Foreign Minister on several occasions and offered to meet and explain fuel prices. However, we still need to receive a response. ‘
The anger over petrol prices has led to fuel thefts at courthouses by up to 61 per cent as drivers struggle to afford spiral pump prices.
Industry bosses yesterday revealed the worrying trend, with around 50,000 ‘evictions’ and ‘no way to pay’ incidents occurring monthly across the UK.
The average value of each fuel theft ranged from £ 53.28 to £ 78.19 and Mr Balmer said it could cost the industry £ 25 million a year.
He said ‘drop-off points’ – where a motorist is perfect and makes no effort to pay – and people who are unable to pay have risen a combined 61 per cent this year compared to the same period last year. He said: ‘As far as fuel thefts are concerned, it goes through the roof.
‘We therefore have’ no means to pay ‘incidents, when someone is perfect and then they say they have left their wallet or purse at home and can not pay. It still amounts to about £ 16 million.
He said police had refused to deal with the incidents worth less than £ 100.