Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the Vedomosti newspaper on current trends in the global oil market.
The April decline in oil prices is caused by two key factors. The first is the introduction of US import duties on goods from 185 countries. The market fears that the trade war announced by President Donald Trump will lead to a slowdown in economic growth, especially in the United States and China.
The second factor is the decision of the OPEC+ countries to start a recovery in oil production from April. At the same time, Russia, Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman agreed to increase production by 411,000 barrels per day from May, which is three times more than the previously planned level.
Alexey Belogoryev notes that these two factors have overlapped with the "bearish" market sentiment due to the "growing imbalance between the growth rates of supply and demand." Another factor, in his opinion, was the current geopolitical background – the possibility of resolving the conflict in Ukraine and the resumption of US negotiations on the Iranian nuclear program. This reduces the risks of toughening sanctions against Russian and Iranian oil exports, the expert explains.
Belogoryev considers the most likely scenario to be the preservation of prices in the range of $ 60-70/barrel with possible reduction to $50-55 by the end of the year. The quotes return to $70-80 and higher demands a sharp increase in the "geopolitical premium" in price, the analyst notes.
In general, the Brent oil price decrease to $50-60/barrel for the Russian oil industry is not critical, provided that the ruble exchange rate stops strengthening, he adds.
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