With G-7 finance ministers agreeing Friday to impose a price cap on Russian oil, followed by Gazprom's declaration that the Nord Stream gas pipeline to Europe will not reopen as planned, it is worth remembering J.P. Morgan's shock forecast earlier this summer that crude oil prices could skyrocket to as high as $380/bbl if the G-7 placed a price cap on Russian oil and Vladimir Putin retaliated with production cuts.

Gazprom claimed it found an oil leak at a vital pipeline turbine, forcing it to shut Nord Stream "indefinitely," but the move came just hours after the G-7 announced its planned price cap; Russia also is threatening to stop selling oil to any country that supports price caps for Russian oil.

"The most obvious and likely risk with a price cap is that Russia might chose not to participate and instead retaliate by reducing exports," JPM's analysts wrote. "It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia's side."

Attention will turn to Monday's OPEC+ meeting, after Saudi Arabia's energy minister recently floated the prospect of a production cut, although most analysts expect the cartel will hold off on such a step.

Crude prices fell in the week just passed as traders reacted to another major COVID lockdown in China and continued worries about the global economy as the Federal Reserve and other major central banks tighten monetary policy.

Front-month WTI crude (CL1:COM) for October delivery settled -6.6% to $86.87/bbl this week, November Brent crude (CO1:COM) ended the week -6% to $93.02/bbl, and Nymex natural gas for October delivery finished -5.2% to $8.7860/MMBtu.

Source: Barchart.com