HomeMediaLatest NewsHow geopolitics inflated oil prices

How geopolitics inflated oil prices

11 February 2022

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Alexey Gromov, Principal Director on Energy Studies at the Institute for Energy and Finance, commented to on the current situation at the world oil market.

The high level of world oil prices at the moment is a consequence of geopolitics, the premium for geopolitical risks in the cost of a barrel is about $10, Aleksey Gromov told RIA Novosti.

Brent crude is currently trading at $90-91 per barrel. At the same time, on February 7, its quotes reached $94 per barrel for the first time since October 2014.

"The current level of oil prices is the effect of geopolitics. Moreover, this premium is very high. Traditionally, 5-7 dollars are allocated for it, but now, due to the fact that geopolitical factors are not only Iran, but a new line of confrontation - Russia-USA-NATO , it is about $10 (per barrel - ed.)," he said.

What if without?

According to Gromov, if now oil quotes are storming the range of 90-93 dollars per barrel, then without the geopolitical factor they would immediately fall to about 82-83 dollars. And, probably, in the future, every month, prices would continue to smoothly correct downwards, as the volume of oil production in the world continues to grow.

“If now we were only within the framework of fundamental factors, then current prices do not meet them. Yes, there is still a shortage of supply, but it is insignificant and at the same time stable. In principle, during 2021 it showed approximate stability at the level of 1.2- 1.5 million barrels per day. Commercial reserves are declining, but the situation can unfold at any moment, "the expert adds.

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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