Alexey Gromov, Principal Director on Energy Studies commented on the prospects for the global oil market in terms of the second wave of the COVID-19 pandemic to Oil and Capital.
Aleksey Gromov, Energy Director of the Institute for Energy and Finance, believes that repeated lockdowns caused by the pandemic indicate that a pessimistic scenario is coming true: “In my opinion, the risk of a periodic increase in the epidemiological situation will persist until mass vaccination of the population on a global scale. A key consequence of the aggravation of the epidemiological situation in the EU and the United States will be weakening the pace of global economic recovery. Our Institute predicts that the world will reach pre-crisis levels of liquid hydrocarbons consumption no earlier than 2023-24,” the expert said.
He is confident that in this situation it is difficult to expect sharp positive price trends in the oil and gas market: “Rather, one can assume that the price of hydrocarbons will look at the demand and the OPEC + deal.
If the deal stands the test of time and continues in 2021, a slow recovery in oil prices can be expected.
In case OPEC + ceases to exist, as well as in terms of a slow recovery in demand, it is worth preparing for new unpredictable collapses in prices,” Gromov explained.
According to the expert, oil exporters should not place high hopes on China: “Although the PRC demonstrates an ideal model of countering the coronavirus, China is only 20% of the world's oil consumption, and this is not enough to reanimate the global hydrocarbon market. It would be beneficial for Russia if the recovery in demand takes place in the EU and the US, since the Chinese lockdown affected the world economy in the first quarter, lockdowns in the EU and the US lasted longer and new restrictions are now being introduced. In such conditions, the recovery in demand is proceeding extremely slowly, and there is even a risk of stopping the positive trend,” Gromov stressed.
Alexey Gromov recalled that many countries, within the framework of the announced programs to overcome the consequences of the coronavirus, announced their intention to bet on low-carbon development:
“For countries importing hydrocarbons, the coronavirus has become a trigger for acceleration of low-carbon transformation of the energy sector.
The expert noted that in this situation Russia will face a difficult and painful period associated with the prospects for a contraction of the hydrocarbon market: “It would be better to reboot our energy relations at the international level in the coming years. Russia needs to offer the world its contribution to the concept of low-carbon development,” Gromov summed up.
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