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Oil Likely To Hit $200: SEB Group

Oil prices are likely to soar past $200 per barrel if G7 manages to cap the price of Russian crude oil, according to chief commodities analyst at Swedish bank SEB Group.

Bjarne Schieldrop, SEB analyst, said on Wednesday in no uncertain terms that the G7’s price capping proposal was a “recipe for disaster” given the current stress that the oil market is under.

The G7 leaders agreed on Tuesday to study ways to cap the price of Russian oil sold internationally and are seeking support among "like-minded" nations. It was one of the critical items to be discussed at this week’s G7 meeting as the group tries to find creative ways to lower energy prices for themselves and maintain adequate crude supplies from Russia—while simultaneously punishing Russia in what many see as an impossible task.

U.S. Treasury Secretary Janet Yellen continued to put pressure on European countries to support a price cap.

According to Schieldrop, the plan seems “neat on paper, but it sounds like a recipe for disaster right now,” given the strong demand for crude oil and low supplies that so far given Russia the upper hand in the market. Russia could, the analyst argued, choose not to sell the oil at a capped price—a decision that could lead to Russia’s production falling by as much as 2 million barrels per day.

Russia’s crude and condensate production rose in June by 5% to 10.7 million bpd, according to Kommersant sources—a figure that includes between 800,000 and 900,000 bpd of condensate, which is not included in the OPEC+ agreement. But Russia’s oil exports have slipped 3.3% in June with the rise of domestic refining demand.

Russian Deputy Prime Minister Alexander Novak said that Russia would raise its production again in July.

By Julianne Geiger for Oilprice.com

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  • Tom Butler on June 30 2022 said:
    What will be the impact of foreign firms (European, US,..) pulling investment out of Russia oil production, for example infrastructure, equipment, replacement parts, consultants, etc. ? Assume that will impact Russia's ability to continue to produce at prior capacity unless they have become self-sufficient in terms of manufacturing equipment needed, etc?
  • Brent Jatko on June 29 2022 said:
    Why not $300?

    At that price consumption may actually be affected, even in the US.
  • Al Goobi on June 29 2022 said:
    Given the current stress that the oil market is under? What stress?

    Doesnt look like stress, oil is lower now than under 2011-2014, taking inflation into account, the oil price is about 80$/bbl in 2012 years oil prices.
  • T G on June 29 2022 said:
    Easy bluff to call, they're going to look like fools when Putin comes out laughing and refusing to sell. Then they'll crawl back on their knees and beg to his great delight.

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