Why oil is not getting more expensive despite the OPEC+ efforts and tensions in the Middle East

Alexey Gromov, Principal Director on Energy studies of the Institute for Energy and Finance, commented to Forbes on the current situation at the global oil market amid rising tensions in the Middle East.

"The fact that prices are staying in the current range is due to macroeconomics," Alexey Gromov said. — At the same time, the US and the EU economies are sinking and the Chinese economy is stalling, which affects the volume of oil consumption. There is no shortage in the market, prices fluctuate with a tendency to decrease somewhat. How long this will last will depend on the economic activity of the countries in the first quarter of this year. If the demand for oil increases, then perhaps oil prices will creep up following the growth of the global economy. If not, prices will remain at the same levels, and suppliers will take on all the growing transportation costs associated with geopolitical and sanctions factors."

"It's the same story with the Houthi attacks in the Red Sea," he said. — Transport has been reoriented to bypass Africa. It costs more in terms of ship freight, but given that there is no rush demand for oil on the market, all these costs are borne by shippers, since the market does not want to buy oil at higher prices."

"Another indirect evidence that we now have a buyer's market, not a seller's, was Saudi Arabia's reduction in prices for all buyers," Gromov believes.