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JPMorgan: Oil Could Easily Hit $120 If Russia-Ukraine Tensions Escalate

Oil prices rose late on Wednesday afternoon with Brent reaching just shy of $92 per barrel. But JPMorgan is warning that Brent crude could “easily” reach $120 per barrel—if the geopolitical conditions between Russia and Ukraine deteriorate.

The price spike of which JPMorgan is warning would likely come as a result of disrupted oil flows from Russia should the U.S. sanction it for hostile activities in Ukraine.

The warning may seem, at first glance, like a bold or even reckless prediction. However, Russia remains one of the top three oil producers in the world, producing roughly 11 million barrels of crude oil per day.

Of that, approximately half is exported—the majority of which makes its way to China.

China, however, has a history of purchasing crude oil from sanctioned nations such as Iran and Venezuela.

But even if Russian exports were just cut in half, oil prices could skyrocket to $150, JPMorgan said in a note this week.

For the Biden Administration, choosing between sanctioning Russia’s oil exports and keeping retail gasoline prices at American pumps from reaching the stratosphere seems like a no-win scenario.

Gasoline prices are already higher than the Administration—and American consumers—would like. As mid-terms loom, the ruling party will likely do everything within its power to lower—not raise—these prices at the pump.


While this would be devastating for both the Biden Administration and the American consumer, it would be equally taxing on Russia, which relies a great deal on crude oil revenue for its budget. Last year, the value of Russia’s crude oil exports totaled more than $300 million per day.

By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on February 10 2022 said:
    Even without an escalation of tensions over Ukraine, Brent crude oil is going to hit $120 a barrel in the next few years. The reason is that the global oil market is already in a super-cycle phase that could last ten years with continued growth in demand and more surge in prices.

    Moreover, JP Morgan is exaggerating the impact of sanctions on Russian oil exports. Sanctions can’t stop Russian oil exports. China will be delighted to buy bigger volumes of Russian crude if nothing more than defying US sanctions. It will never let down its most important strategic ally.

    The European Union led by Germany will exclude Russian energy supplies and Nord Stream 2 gas pipeline from any new sanctions so as to avoid a complete halt of Russian gas supplies.

    The entire LNG exports from the United States, Qatar and Australia could hardly replace the almost 200 billion cubic metres per annum (bcm/y) piped by Russia to the EU in addition to an estimated 15-16 million tons a year (mt/y) of LNG. Only Russia can satisfy the EU’s gas demand

    Moreover, Europe has a limited LNG import capacity. This makes ramp-ups of LNG imports quite useless particularly if they are needed to replace Russia’s almost 40% share of the European gas market.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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