Analysts with JPMorgan Chase said the price of a barrel of oil could triple if Russia decides to cut its output amid record-high gas prices.
The current price of a barrel of oil is around $110, but if Russia cuts production it could rise to an “atmospheric” $380 a barrel, analysts at JP Morgan wrote in a note, according to Bloomberg News.
“The government is likely to retaliate by cutting production as a way to hurt the West,” analysts said in what he described as a worst-case scenario. “Global oil market tightness is on Russia’s side.”
JPMorgan analyst Natasha Kaneva said Russia’s production cut of 3 million barrels per day would push global prices to $190 per barrel. And worst case scenario, if Moscow cuts 5 million barrels per day, it could send the price to $380.
Since the Ukraine conflict began on February 24, Western nations have hit Russia with punitive sanctions. However, Russia supplies much of Europe with oil and natural gas. Meanwhile, the United States has blocked all Russian oil exports since March.
If the West continues to target Russia’s oil industry, JP Morgan’s analysts say the Kremlin may not play along.
“The most obvious and likely risk with a price cap is that Russia may choose not to participate and instead retaliate by reducing exports,” the note said, according to Bloomberg.
The nationwide average for a gallon of regular gas was about $4.81 on Sunday, data from AAA showed, a slight decrease of about 10 cents from the previous week.
Last week, when asked how long Americans should expect to pay higher gas prices, President Joe Biden said he would continue to raise them as long as it takes to resolve the conflict.
“Russia can’t actually defeat Ukraine and move beyond Ukraine as long as it takes,” Biden told reporters on June 30. “This is a critical, critical position for the world. We’re here. Why do we have NATO? In fact, I told Putin that if he moves, we’re going to strengthen NATO. We’re going to move to strengthen NATO across the board.
White House economic adviser Brian Dees said Americans should pay higher prices because “it’s about the future of the liberal world order, and we have to stand firm.”
Biden tried to shift the blame for the high prices to gas stations, writing on Twitter: “My message to the companies that run gas stations and set prices at the pump is simple: This is a time of war and global danger. Lower the price you’re charging at the pump to reflect the cost you’re paying for the product. And do it now. “
He did not provide any examples of how gas stations could “drop prices.” It is not clear if he is writing to individual gas station owners, companies or individuals who own multiple franchises.
A day later, Pentagon Press Secretary John Kirby defended the Twitter post in an interview with Fox News on Sunday morning.
“If everyone cooperates, we can get the price down to at least a dollar,” Kirby remarked, “so they’re working very hard to do this because they know the impact that higher gas prices have on America. The household.”