HomeMediaLatest NewsThe storm in the oil market. What will happen to prices?

The storm in the oil market. What will happen to prices?

03 October 2024

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Finam.ru about the current dynamics of world oil prices and its causes.

The Middle East is in chaos again. Oil prices have been rising for the third day in a row. Forecasts are being made for its rise from the current $75.5 to $100 later in October. At the same time, the media reports about the imminent fall in the value of “black gold” to $ 50 per barrel, and investors in the market are puzzled: why hasn't the $200 mark been broken yet?

According to Alexey Belogoryev, it is difficult to comment on these stuffing, since the situation is not completely clear.

“These are obvious information stuffing. Who initiated them remains to be seen. While there is no complete certainty, it still needs to be proved that the Saudi authorities themselves are behind them, although this answer suggests itself first. It is possible that this is someone's more subtle game: from the US authorities to large traders. This may be either an information attack aimed at lowering prices, or an attempt by Saudi Arabia to put pressure on other OPEC+ participants so that they increase their discipline in the implementation of quotas. In practice, such information stuffing achieves both goals, although, most likely, only one of them was set. So far, there is no real reason to believe that Saudi Arabia, in fact, is ready to plunge headlong into the struggle for sales markets, allowing prices to fall below the conditional $ 60 per barrel. But it is really concerned about the decline in discipline within OPEC+, and especially that this decline is beginning to take on and is likely to become chronic. And these are not just temporary difficulties, but a long-term inexorable trend. OPEC+ has exhausted the potential to reduce its own production. In recent years, OPEC+ countries have looked at the oil market from a strong position, being able to quickly and more or less effectively reduce the current oil supply. This year there was a radical change. In the coming months and even years, OPEC+'s position will be weak: the only thing it can offer the market is attempts to curb the production growth of its members, but growth itself will be inevitable. Moreover, the parties to the agreement are likely to face the loss of their former discipline, which was a distinctive feature of OPEC+,” the expert explained his position.

He also drew attention to the fact that this is a common phenomenon for turning points at which the main trend changes, and the observed change is really fundamental.
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