Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Moskovskaya Gazeta on the oil prices dynamics at the world market.
The main reason for the decline in oil prices is related to the European market, Alexey Belogoryev told Moskovskaya Gazeta.
It is difficult to predict what will happen on the oil market after the New Year, Alexey Belogoryev noted.
“On the eve of the December 5 embargo on Russian oil, Western countries were very actively buying oil, entering into supply contracts and were very successful in this,” the expert confirmed to the Finam analyst. — Large volumes of oil from Latin America, Iraq and the United States were redirected to Europe. Now in the European market there is not exactly overstocking, but a certain excess of supply. The mood on the market is now calm, and in addition to the fact that prices are generally decreasing, the difference in prices between Brent and, for example, American oil brands is also decreasing: Europe is not ready to overpay for an alternative to Russian oil.”
“The uncertainty is related to whether Russia will be able to redirect the falling export volumes to the eastern market after December 5 and whether there will be enough sea transport for this. There are different opinions on this. I think that there will be a one-time shock associated with both the lack of tankers, insurance problems, and the fact that on the eve of December 5, many companies, including Indian ones, will be afraid to contract oil from Russia due to uncertainty about the details of the embargo: buyers from Indochina is very sensitive to any sanctions from the US. According to my estimates, the loss of exports may amount to 1.5 million barrels of oil per day, and the situation will be corrected only by the summer. At the same time, Russian companies will strive to supply oil with the shortest transport distance. That is, China and Turkey will be the priorities. The problem will be the remote market of India, and this is the key market that has taken over the supply of Russian oil,” Alexey Belogoryev said.
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