Analyst Yushkov called oil at $150 unprofitable for Russia

Manufacturers will try to increase prices for gasoline and diesel fuel

The consulting company Ernst & Young (EY) reported the risk of oil prices rising to $150 per barrel. This could happen if the United States or Iran enter the conflict between Israel and Hamas. This forecast was given by the company’s chief economist Greg Daco. In Russia they do not consider this price profitable.

The expert named three possible scenarios for the development of the situation. The most pessimistic scenario assumes that the war between Israel and Hamas will not end, and that in the future it will involve the United States, Iran, or both countries together. In this case, Brent prices could soar to $150 per barrel.

He also spoke about two other possible scenarios for the development of events in the Middle East. In the most optimistic scenario, Brent will rise in price by only $3 per barrel, and the moderate scenario assumes that Brent quotes will first increase by $7 per barrel and then go down.

In general, all scenarios describe an increase in the price of “black gold”, albeit by different values..

We remind readers that before the Hamas attack on Israel, Brent was trading around $83–84 per barrel, but after the start of the war, prices went up sharply. At auction on Thursday, October 19, the price of Brent exceeded $93. Now quotes are above $90 per barrel.

Unfortunately, the worst-case scenario for the economy (at $150 per barrel) looks very realistic today. There is already not enough oil on the world market. And if Iran, which exports about a million tons per day, directly enters into the conflict in the Middle East, then this export will not exist at all…

It would seem that an increase in oil prices is beneficial to Russia from all sides.

“In the short term, this is good for our country,” says Igor Yushkov, leading analyst at the National Energy Security Fund. – We will be able to increase production and export volumes. But there are also disadvantages to this scenario.

The situation with high prices will not last long. At $150, the world economy will go into recession and energy consumption will decrease. If demand falls, prices will fall. And the way out of the recession will be very long; the market itself will form a new cost per barrel.

In a word, this scenario is also not beneficial for Russia.

Today’s prices of 80-90 per barrel are the most optimal. They suit both producers and consumers. The economy is not shrinking.

– If a pessimistic scenario happens, how much will gasoline cost in our domestic market?

– Of course, manufacturers will be tempted to raise prices for gasoline and diesel, this always happens. But if the damper mechanism works normally, then they are unlikely to change much.