JP Morgan "If Supply Disruptions of Russian Crude Continue, Brent Oil Could Reach $185"

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] U.S. bank JP Morgan Chase has projected that Brent crude oil prices could rise to $185 per barrel if disruptions in Russian crude oil supply persist, Bloomberg reported on the 3rd (local time). This forecast suggests that international oil prices could surpass the all-time high of $147 per barrel recorded during the 2008 global financial crisis.

JP Morgan estimates that currently 66% of Russian crude oil is struggling to find buyers. This is because the market is reluctant to purchase due to concerns that these supplies could become subject to future sanctions.

While the U.S. and Europe have imposed strong financial sanctions on Russia, they have not yet directly sanctioned Russian crude oil. This is due to fears that a reduction in Russian crude oil supply could further exacerbate already severe inflation. The European Union (EU) plans to exclude seven major Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) starting on the 12th, blocking dollar payments. However, two banks, Sberbank and Gazprombank, have been exempted from sanctions to allow payments for oil and gas.

However, as Russia continues its offensive against Ukraine, there are growing expectations that Russian crude oil could eventually become a target of sanctions.

JP Morgan estimates that with the expansion of sanctions, Russian crude oil sales in the U.S. and Europe could decrease by 4.3 million barrels per day.

JP Morgan noted that the oil supply shock caused by the Russia-Ukraine conflict is significant and expects that oil prices need to remain around $120 for several months to reduce demand. Additionally, although expectations for the Iran nuclear deal are rising, Iranian crude oil is not expected to be supplied to the market immediately.

JP Morgan maintained its oil price forecast. It projected average Brent crude prices at $110 in Q2, $100 in Q3, and $90 in Q4. If negotiations to restore the Iran nuclear agreement fail and Iranian crude oil does not enter the market, Brent crude prices are expected to increase by $5 per quarter.

On the day, Brent crude futures closed at $110.46 per barrel, down $2.47 (-2.2%) from the previous trading day. However, prices threatened the $120 level early in the session, reaching $119.84 per barrel, the highest since May 2012.

This content was produced with the assistance of AI translation services.