The scenarios outlined so far are more of a mental exercise than realistic scenarios. How high is anyone’s guess, and it would depend on the rate of cuts. Whatever the case with those cuts, the simple fact is that Russia can reduce its production deliberately. It already has announced certain cuts, but those, some commentators say, are a result of Russia’s inability to pump as much as before rather than deliberate action. would switch sellers, which is exactly what happened.Īnother thing few considered was Russia cutting oil production in retaliation for Western sanctions. Of course, those forecasts never considered the option that Russia would simply switch buyers and Europe and the U.S. bans on Russian oil imports as the basis for their forecasts, and at the time, it did seem like a sound basis. Most forecasters who saw oil rising to $200 cited European and U.S. An attack on Saudi production facilities could do the trick if it’s very successful, but with the war in Yemen nearing its end after the Chinese-brokered thaw between Riyadh and Tehran, such an attack has become purely hypothetical.Īll the $200-per-barrel forecasts from last year had to do with Russian oil. Yet outages do not move prices so radically as to take them from sub-$90 to $200, so this is an even less likely scenario. Production outages could push oil prices higher, as they invariably do, even when the outage is as small as 400,000 bpd, as we recently saw with the Kurdistan-Iraq export dispute. ![]() OPEC+ has suggested with its latest moves that its sweet price spot is around $80-90 per barrel, so it is trying to keep prices around that level. Because $200 is way too high a price, and it would sap demand. ![]() To get prices to $200, OPEC+ would need to cut much deeper, but more importantly, the group would have to want it. It’s not certain they would reach $200 even in an escalation scenario because it’s highly unlikely the market could bear this price for any length of time, but it’s not impossible.Īs far as chances go, this scenario is less likely than the first one. ![]() Yet a major escalation in the conflict, possibly through more direct NATO involvement, could send prices flying high. It turned out that the European side is not losing Russian supply but is simply getting it through third countries now, so that’s saved the global economy from a major oil price-induced headache.
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