TheCable

JPMorgan, American investment bank, says oil prices could increase to a record $185 per barrel if the European Union (EU) placed an immediate ban on imports of Russian oil.

According to Bloomberg News, JPMorgan said this in a note.

Since Russia invaded Ukraine, the EU has been deliberating on breaking away from years of dependence on Russian oil by banning imports of the commodity.

But members of the bloc have been divided on the matter.

For instance, Germany has continued to argue against an immediate oil embargo, for now, saying an oil ban would plunge Europe into a deep recession.

Hungary and Austria, as well as some other EU members, continue to resist an immediate outright ban on Russian oil.

A full and immediate ban could displace more than 4 million barrels a day of supplies — propelling Brent prices up by around 65 per cent to $185 a barrel, JPMorgan warns.

“And there wouldn’t be enough appetite or time to re-direct the barrels to China and India,” Natasha Kaneva, head of global commodities strategy at JPMorgan, added.

The bank estimated that there could be a cut in 2.1 million barrels a day of Russian supplies to Europe by year-end.

Kaneva, however, added that a gradual phase-out over about four months, similar to the approach taken with Russian coal supplies, could be carried out without significantly disturbing prices.

The ban on imports of Russian has been a slower process than initially expected. An EU official said drafting and preparing for such a ban would likely take “several months”.

But if the war in Ukraine forces the EU into more action, the hit to supplies — and discomfort for consumers — could be much bigger.