Oil price will face a shock and go skyhigh
Updated
According to the latest news,German economy minister expects EU embargo on Russian oil 'within days' -ZDF.
There are 2 main point. Europe and US is about to 1.Embargo Russia Oil 2.Set Oil price upper limit.
What might Europe and the United States do?
Europe and the United States may adopt a similar approach to carbon tax, that is, imposing additional tariffs on countries whose oil import prices are higher than a certain price. This will cause chaos in the supply chains in Europe and the United States and increase the price of all products. Inflation will reach double digits above 10%. Other countries will not be affected as long as Europe and the United States is not the major export market.
Possible impact to Oil market?
According to the plan of Europe and the United States, there will be no OPEC countries willing to ship the oil at spot price. In the end, buyers crowded into the futures exchange. Oil futures are decoupled from spot prices. Oil giants in Europe and the United States will have no oil to sell because they must comply with the price limit regulations.
Reaction to Oil price(UKOIL and USOIL)
As the graph shows, in the begining, the oil price will drop due to the oil price limit. However soon OPEC+ will reduce the oil supply and let the oil futures goes skyhigh. There are 2 scenario, one is to test $106 and the other is to test $86-$98. Either way will make oil futures price goes skyhigh afterward.
There are 2 main point. Europe and US is about to 1.Embargo Russia Oil 2.Set Oil price upper limit.
What might Europe and the United States do?
Europe and the United States may adopt a similar approach to carbon tax, that is, imposing additional tariffs on countries whose oil import prices are higher than a certain price. This will cause chaos in the supply chains in Europe and the United States and increase the price of all products. Inflation will reach double digits above 10%. Other countries will not be affected as long as Europe and the United States is not the major export market.
Possible impact to Oil market?
According to the plan of Europe and the United States, there will be no OPEC countries willing to ship the oil at spot price. In the end, buyers crowded into the futures exchange. Oil futures are decoupled from spot prices. Oil giants in Europe and the United States will have no oil to sell because they must comply with the price limit regulations.
Reaction to Oil price(UKOIL and USOIL)
As the graph shows, in the begining, the oil price will drop due to the oil price limit. However soon OPEC+ will reduce the oil supply and let the oil futures goes skyhigh. There are 2 scenario, one is to test $106 and the other is to test $86-$98. Either way will make oil futures price goes skyhigh afterward.
Trade active
Today EU announce EU will embargo Russia oil before the end of 2022. Since there is no pricing limit against oil, the oil price will go higher and higher above the $150 neckline of the bow without withdraw.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.