The planet is on fire, but oil prices are not rising. How can Trump achieve his goal?

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, gave a detailed commentary to the Novye Izvestia Internet portal on the impact of current events in Venezuela and Iran on the Russian oil industry.

To win the midterm elections and retain his majority in Congress, Trump needs not only cheap eggs, but also cheap gasoline. The American president is helped in this by the surplus that has developed in the oil market. That's why he makes it so easy to promise to lower the price of Brent crude oil to $50/bbl.

— This statement by Trump is an element of his political PR, because we see that the market had a surplus of about 2.5 million barrels per day by the beginning of January. This surplus puts downward pressure on prices, taking into account the Venezuelan events, if Trump attracts investments there," Alexey Gromov believes.

On February 1, a meeting of the OPEC+ founding states will be held, which must decide what to do next. If it is decided that restrictions are not needed, and the United States, Guyana and Brazil continue drilling at a rapid pace, prices may indeed fall to $50/bbl by the end of the year.

— Everything in this situation will depend on the actions or omissions of OPEC+. In case of inaction, a price drop to $ 50 by the end of the year is possible. If OPEC+ not only maintains the freeze on production recovery, but also returns to new additional voluntary restrictions on the market, then the fall in oil prices will be stopped at $ 55/bbl, the expert says.

— Today, Russian oil is sold at a price of about $45/bbl. Yes, this is a discount of 17-18 dollars relative to Brent. Yes, it's a big discount. But from the point of view of production profitability, which forms its basis, this price level is quite acceptable. It reduces budget revenues, but profitability remains, Alexey Gromov explains.

However, even now the export of hydrocarbons from Russia is decreasing. If there is an even greater tightening of sanctions, export volumes will have to be reduced. Only a third of the oil produced is consumed domestically and two thirds go abroad, Alexey Gromov says:

— Foreign markets are not a bottomless barrel for us today. The volume of foreign markets for Russian oil is decreasing under the sanctions pressure. In this situation, we can reduce exports of oil and petroleum products, because we can meet our own needs with significantly fewer resources than those we currently produce.