JPMorgan has downgraded its 2023 oil price forecast after calculating only a minor impact from the EU’s price cap on Russian oil, writes Danish media Jyllands-Posten Erhverv.

JPMorgan now forecasts that a barrel of North Sea oil will be in the region of USD 90, down from a previous average of USD 98 per barrel in 2023.

The adjustment is attributed to an expected normalization of Russia’s oil production by the middle of next year.

Such an outlook presupposes that Russia sells its oil supplies elsewhere than in the European market going forward.

Thanks to various discounts, India has been an eager buyer of Russian crude after European nations cut down on buying from the warring nation. This trade is expected to continue, barring any interference from the West, writes JPMorgan.

A fully effective transatlantic embargo would pull a considerable amount of oil from the market, leading to higher oil prices.

Meanwhile, the G7 nations have found it difficult to agree on a price cap on Russian oil, having to strike a balance between ensuring oil supply in the market and weakening Russia’s economy at the same time.

Economist at Unicredit Bank Edoardo Campanella explains that the challenge consists of introducing a price cap that is low enough to affect Russia’s economic capabilities and high enough for it to remain attractive to sustain the current oil production.

Due to vulnerability to geopolitical developments, the oil market is characterized by significant uncertainties, but the market outlook of increased prices next year rests on a sound foundation, writes Jyllands-Posten Erhverv.

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