- Oil prices could spike to $185 a barrel if EU abruptly banned Russian crude, JPMorgan said Tuesday.
- A full and immediate embargo would displace 4 million barrels per day of Russian oil.
- A slower phase-out of Russian crude would likely have little effect on prices.
Oil prices could soar if the European Union quickly bans Russian crude from its energy markets, JPMorgan said on Tuesday.
A full and immediate embargo would displace 4 million barrels per day of Russian oil, sending Brent crude to $185 a barrel as such a ban would leave "neither room nor time to re-route [supplies] to China, India, or other potential substitute buyers," the investment bank said in a note. That would mark a 63% surge from Brent's close of $113.16 on Monday.
The EU is weighing a ban as a consequence of Russia's invasion of Ukraine in late February. But if the bloc were to put in place an embargo over a four-month period, prices are unlikely to rise much higher than current levels, the bank said. Such a time period would be similar to Europe's ban on coal imports.
"In a slower phase-out," the bank said, "Russia would have more time to adjust its oil flows toward friendlier buyers and global ex-OPEC+ supply growth would have time to grow sufficiently to fill at least some of the Russia-sized hole in global oil supply."
India has increased its imports of Russian oil to three times the levels logged in 2021. But "its ability to continue to act as a sink for displaced Russian oil supply remains in question as the US warns India not to increase imports further," said JPMorgan.
Even without an EU oil ban, Russian exports are suffering as energy traders have avoided handling contracts for Russian crude in a trend of "self-sanctioning."
Seaborne shipments dropped 25% week-over-week, Bloomberg data showed Tuesday. As a result, Russian oil revenue in the week leading up to April 15 fell to $181 million from $240 million in the week prior.