In 2018, the price of oil was kept in the range acceptable for Russia, OPEC and other oil producers. And even rose above $80. However, by the end of the year, prices collapsed to $50 a barrel, after the American President Donald trump. “Газета.Ru” understood, will Russia be able to defeat the “conspiracy of trump.”
The Trump Factor
Geopolitical factors gave the oil market in the past year, a real rollercoaster. Moreover, both words are in its place.
First, under the influence of fundamental factors such as supply and demand, oil prices gradually leveled off at around $60-63 per barrel. But then something went wrong.
First and foremost, manifested itself in Venezuela. Under the pressure of us sanctions in the country is more rapidly decreased the oil production in early 2016 Venezuela produced 2.6 million barrels per day (b/d), and by the end of 2018, this figure fell to 1.24 million b/d.
Thus, one country was removed from the market more than half of the volume of oil from the OPEC agreements+. We will remind, the OPEC deal+ to reduce the production of 1.8 million b/d between 23 countries was reached at the end of 2016.
The second “victim” of the United States was Iran. In March, Donald trump announced the US withdrawal from the “nuclear deal” and the return of the sanctions against Tehran, including an oil embargo. Many allies of Washington hastened in advance to refuse Iranian oil, and the Islamic Republic began to respond to verbal intervention States, in particular, promising to close the Strait of Hormuz for oil exports from the Persian Gulf.
All of these events, coupled with the instability in Libya and the problems of Venezuela, has led to a spike in prices. And, the more threatened the United States, Iran and their customers, the higher up quotes. In the end, a barrel of Brent oil reached a multi-year high at $86.
At the same time, trump was blamed OPEC and demand “immediately lower prices”. Similar tweets he wrote the whole year. In October during Russia’s energy week, Russian President Vladimir Putin said that if now led direct discussion with the US President on this subject, said to him:
“If you want to find the culprit of rising oil prices, Donald, you need to look in the mirror”.
After a while Donald probably followed this advice to commend ourselves for the decline of oil prices. The threat of extinction from the market of Iranian oil caused a number of OPEC members to increase production. First and foremost, Saudi Arabia and Russia. Strengthened its market position in the United States. According to the latest data of EIA, crude oil production in the US has reached 11.7 million b/d, higher than in Russia and Saudi Arabia.
The murder in Istanbul of a Saudi journalist Jamal Kosugi gave trump another lever of pressure on the Saudis and the oil market.
Final anti-Iranian sanctions have proved softer than advertised, and because of trade wars waged by Washington, there was a threat of global recession. On the background of these events, oil prices went down. The collapse of the American stock exchanges against the background of internal issues and improving the rate become an additional catalyst for the process.
For the last three months of 2018, oil prices have fallen by 40%. At some point, they reached $46 a barrel.
Sometimes, however, prices have gone down for no objective reason, as a technical correction could not take a steady uptrend, even if that was all the prerequisites. This gave reason to assume that the market is a group of large players who torpedoed the attempts to disperse the oil quotes.
Oil prices do untethered from actual demand and supply and is rather the result of the speculation of large players, which, however, cannot go against the market and against common sense, says the analyst of “ALOR Broker” Alexey Antonov. In late November, he talked about a “black bear”, playing on the slide.
A sharp drop in prices that we observed may be due to automated exchange trading systems: it is believed that they increase the volatility because of their settings, and a quick correction on the us stock markets is also partly subject to the action of trading robots, experts say.
In addition, it can be assumed that the fall in prices caused by the violation of OPEC members+ their commitments to reduce production. According to the cartel, officially, the transaction is executed on 78%, in fact, experts warn, violations can be more.
Another parameter around which revolve ideas in the oil market, is the growth of the world economy and its prospects, says Antonov. Now if global GDP grows at around 3.6%, even a reduction of this indicator on 0,5-1% should, theoretically, lead to lower oil consumption and reduce its price. And this trend could intensify the trade war with China, which is still paused.
During the Christmas holidays, on the “thin” market, that is, when the trading volume is small, speculators may try to push the price of oil to $45 per barrel, analysts warn. But not for long. The experts unanimously predicting the path of oil to $60 per barrel, not excluding at the same time that rising prices may be higher.
The hard way up
The quotes at the beginning of 2019 will be about $70 per barrel, I’m sure chief analyst at Promsvyazbank Vladimir lyashchuk. This will contribute to the emergence of supply shortages in the beginning of next year, due to declining oil production OPEC+ and the risks associated with the export of oil from Iran, Venezuela and Libya, he added.
Higher prices can contribute to potential tensions in the middle East, global economic growth, cold weather, the ability of Saudi Arabia to demonstrate effectively the cartel benefit from a temporary reduction of production, adds the head of the Department of securities with fixed yield of UK “Opening” Dmitry kosmodemyansky.
On the contrary, the pressure downward can provide: détente in the middle East, the fall of the world economy, warm weather in the winter months, the inability of the cartel to agree on production cuts, the growth of reserves and production of shale oil in the United States, the expert continues.
Analysts point out that in 2019 primarily for the oil market will be the state of the world economy. If a serious downturn turning into a recession, prices will inevitably fall.
Now oil prices matched the mark, when the cost of shale oil in the US will become unprofitable, draws the attention of the leading economist of the company “Finist” Denis Lisitsyn.
In the end, we can see massive bankruptcy of small oil companies producing shale oil, in connection with than in the domestic U.S. market may be a shortage of commercial oil, as the statistics on commercial stocks.
But trump is hardly discourages in the struggle for cheap oil. “America will be easier to buy cheap oil on the world market to cover its external deficit,” says Lisitsyn. Therefore, the fact the cost of production of shale oil will not play a significant role in the increase of oil prices on the world market, he added.
Next year means the return of the Russian Federation and other members of OPEC to reduce oil production in the framework of the continuity of the transaction. In early December, countries agreed with 2019 “clean” market with another 1.2 million b/d. If the market believes in the effectiveness of such measures and the commitment of the parties to transactions these arrangements, the oil may return to $70 per barrel.
Data pricing in the economic sphere will also be the most advantageous for Russia, even taking into account the planned reduction of oil production by Russia to 228 thousand b/d (obligations in the framework of OPEC+), notes the main analyst “BCS Premier” Anton Pokatovich. In addition, the expert notes that in the next year, Russia will reduce their production levels from October 2018, when production volumes in the country reached more than 11.4 million b/d.
That is, the return of prices above$ 70 in the next year Russian exporters will be able to sell large volumes at prices comparable with the first half of 2018, he adds.
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