World oil prices continue to decline with the beginning of the week. Wednesday, August 15, the price of WTI for the first time since June 21 fell below $ 65 per barrel, October Brent crude fell by 2.32% to $ 70,78. per barrel. The decline has occurred against the publication of data about the record crude inventories in the United States.
However, as some experts believe, not only in the situation drop, and focused the game of Washington against the “black gold”, which can be successful and in the coming months to lead to a drop in prices of up to $ 50 per barrel. It still hit hard on the Russian economy and the ruble, which largely support high oil prices.
In an interview with CNBC analyst Tom Kloza predicted that prices will come down in November that focused on policy Donald trump. The President of the United States repeatedly in his characteristic manner declared that the world price of oil is too high and should be more “fair”. For this he, in particular, in the form of an ultimatum urged OPEC to abandon the transaction for the reduction of oil production which led to reduced supply in the market. According to trump, OPEC needs to produce at least two million barrels per day more.
June 22, OPEC and Russia have agreed on increase in quotas on extraction of “black gold” by 600-700 thousand barrels per day. On June 30 Donald trump after talks with Saudi Arabia’s king Salman said that he agreed to increase production on the two million barrels per day. Although then in Riyadh said that it was only that country’s oil industry is capable of this, practice shows that trump’s words were said out of nowhere. In the past two months the Saudis have increased oil drilling to the max over the last four years. And reduce the selling prices of their varieties.
And that’s not all. As writes Bloomberg, trump instructed his administration to work out a plan for the sale of state oil from the strategic reserves to lower gasoline prices in the United States before the November Congressional elections. It can also affect the situation on the oil market.
Finally, analysts point out that in the U.S. Congress registered a bill “Against the cartels in the production and export of oil,” which will allow American authorities to sue in the courts against OPEC, accusing them of manipulating oil prices. Moreover, sanctions may be imposed against any of the companies cooperating with OPEC. And in the second stage, and against companies that cooperate with these companies.
This bill was first proposed in 2000, but since then it has not been able to adopt. In 2007, the document even went through both houses of Parliament, but the President has not signed. But Donald trump, who for many years spoke out against OPEC, “robbing American citizens”, could put his signature under the bill.
Thus, Washington is trying to weaken the Union of Russia and Saudi Arabia, which is the basis of OPEC+, and then destroy the whole structure and to announce the liberalization of free global energy market. This may critically change the situation on the oil market and bring down prices much below $ 50. But without the bill, the analysts of Citi believe that the efforts of trump could be enough to derail the price of oil to $ 45. for Brent in a year.
Russian experts, however, believe these apocalyptic predictions rather an attempt to wishful thinking. The Director General of the national energy Institute Sergei Pravosudov said that oil is now very volatile and predict quotes extremely difficult. However, if the prices really dropped to 45-50 dollars per barrel, it would hit the oil industry of the United States.
Too many factors affect the pricing of oil. It is not only the energy market but also financial market, and policy. If you wish, you can pick up the factors for any forecast. If the us experts want to convince everyone that oil prices will decline, they can lead to a number of relevant arguments. But with the same success it is possible to represent the set of factors that will testify to the contrary.
You have to understand that after a rise in oil prices has only just revived the us shale sector. There wave the money went. And if there is another drop, it is a serious blow to American manufacturers. And that’s tax cuts, the bankruptcy of companies and loss of jobs, which promised to provide trump.
“SP”: — But the US remains oil importers, and trump has repeatedly spoken about the need to reduce prices…
— Yes, there are. But with its strong oil industry. It is not only a large number of jobs, but also about $ 300 billion of loans. If you start a bankruptcy, they will hit the banks. All very tied together, and we cannot say that low oil prices are unequivocally beneficial to the United States.
On the other hand, who can guarantee that such an unpredictable politician like Donald trump are not willing to sacrifice the shale oil in order to finally “finish off” Russia? In combination with a multiple package of new sanctions that are already waiting for in Congress, falling oil prices could be a serious blow to the Russian economy. In the end, it was the collapse of oil prices in the years 2014-2016 was critical for the ruble and the economy, not the American and European sanctions.
The head of the analytical Department of the Fund “national energy security” Alexander Pasechnik indicates that the production of shale oil is not such a big place in the economy of the United States. Therefore, itself, a drop is unlikely to stop the Donald trump. The question is whether the Washington real mechanisms in order to bring down the price of “black gold”?
— America is not one oil shale extraction. In a macroeconomic cut its share is not so great. However, the collapse in oil prices is not the best way would affect the oil industry in the US and plans the same trump to increase exports of “black gold”.
It seems to me that such statements trump and expert commentary on the decline in oil prices — rather, it is the desire of the American President to show their importance and not lost a degree of influence on Saudi Arabia. Especially given the convergence in recent years, the Saudis and Russia in the oil of the plane. Here is more propaganda than real content.
The scenario of the collapse in oil prices to $ 45 until the end of the year manorialism. That ought to work too many factors. In addition to the overstocking of the market need to disappear geopolitical factors.
As tensions in the middle East, in particular, in the Strait of Hormuz remains. It also affects oil prices. How, by the way, and the upcoming sanctions of the USA against Iran which will come into force in November. Therefore, the quotations in the corridor of 70-75 back to 65 look more realistic. Is that market volatility will increase, which lifted limits on transaction OPEC+.
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