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Why oil won't cost $ 100 a barrel

02 March 2021

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 the Pravda.ru Internet portal on the possible expectations of significant increasing oil prices in the foreseeable future.

Over the next two years, the price of a barrel of oil may rise to $ 100. This forecast has been recently issued by analysts at Bank of America. This is unlikely, - Alexei Gromov said.

"The subject of accelerating prices to the level of $ 100 and above is already purely financial speculation in the market. There are financial players who are interested in obtaining additional profits from the increased volatility of oil prices. But in fact, many factors, that are pushing the oil price up today , in the near future, maybe even this year, will be balanced by factors that will direct this price down. For example, among such factors I would mention a possible return of Iran to oil market in case of easing US sanctions," the expert said.

Another factor, in his opinion, is the softening of the terms of the OPEC + deal. That is, in the event of an increase in prices, the countries participating in the agreement may begin to increase oil production.

"The third component that has an impact is the recovery of American shale production, which is also observed today, and which will also throw additional barrels of oil onto the market," Alexei Gromov said.

"Therefore, I would not say that the market has finally turned towards high oil prices. Rather, we will get oil prices at an average annual level of $60-65 by the end of this year. Of course, this is higher than it was forecasted at the end of 2020, but there will be no 100 dollars or other stories," the expert is sure.
Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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