Both the United States and the European Union continue to look for ways to put pressure on Russia and attack the Putin regime with other weapons, including economic ones. One way to do this is to put a price cap on its oil, a situation that Moscow could logically not accept. Consequently, the production of barrels of oil would be reduced.
It is from the first of Economics that when supply is reduced, but not demand, the equilibrium price moves to higher levels. Analysts from the JPMorgan bank have calculated how much the international prices of a barrel of oil could reach if the tap on Russian oil begins to close.
If Moscow reduces its production by 3 million barrels per day, the reference prices in London -Brent barrel- would rise to 190 dollars. It is a pessimistic scenario, but not the worst, because if the Russians stop producing 5 million barrels per day, then the price of a barrel would double above what was previously forecast: 380 dollars. Its economy could withstand it, but in many countries of the world not.
To understand how bad the situation would be, the average prices of a Brent barrel between 2011 and 2013 were close to 110 dollars per barrel. The inflationary spiral would be wild because the refineries would transfer these costs to the pumps and the taxes would further increase the difference. The 3 euros per liter would be missed because they are cheap.
In March this year, Russia was producing some 11.3 million barrels per day, of which 7.1 million were for export. If we take exports to China, the main customer at that time (1.6 million barrels), out of the equation, analysts would count on an almost total closure of their exports, in the worst-case scenario.
Something similar to gas would happen. Óscar Arce, director of Economics at the European Central Bank, declared that a cut in Russian gas in the fall would mean: “an almost apocalyptic scenario, but whose probability, unfortunately, is not negligible”. In other words, these levels of inflation would have to be dealt with for another two years. All of this dependence on Russian fossil fuels catches us at a bad time.