Price cap on Russian oil is a ‘ridiculous idea’ and could push oil to $140, says energy research group

According to the co-director of the Institute for the Analysis of Global Security, the idea of a price cap on Russian oil is ridiculous.

Gal Luft told CNBC's "Squawk Box Asia" on Monday that he doesn't think it's a good idea.

He said that it ignores the fact that oil is more than one commodity. Equal value between two barrels of oil is implied by the term fungible.

To bring down the cost of oil for consumers, the U.S. wants to put a cap on Russia's oil prices.

The plan was similar to asking the seller to accept less money than the listed price.

He said that the oil market doesn't work that way. You can't force the prices down.

Those Europeans and Americans that are talking about $40 a barrel, what they’re going to get is $140 a barrel.

He predicts that Russia will restrict its production and create an artificial shortage in the market.

The Europeans and Americans are going to get about $150 a barrel. According to people familiar with the matter, the US and its allies are considering capping the price of Russian oil at $60 per barrel.

He said that you can't trick the laws of supply and demand and that you can't defy the laws of gravity.

The price of oil shot up after countries rolled back Covid measures.

The price of energy went up because of Russia's war on Ukraine. The U.S. banned imports of Russian oil in response to the invasion.

Some oil producing countries are having difficulty raising output.