"Sanctions are more dangerous than Omicron”: what will happen to oil and gas prices

Sergey Kondratiev, Deputy Head of the Economic Department and Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Gazeta.Ru on the possible dynamics of oil and gas prices.

What will happen to oil?

Sergei Kondratiev, a senior expert at the Institute for Energy and Finance, believes that in a certain scenario, there is a risk of a repeat of the 2020 spring crisis. In this scenario, oil quotes may sharply go down by the end of December.

“In case of massive lockdowns, the oil price will fall to $ 30-40 per barrel. But now neither India nor China has sufficient resources to support the economy. Therefore, the real corridor until the end of December will be $ 70-75,” Kondratiev said.

Against the backdrop of falling oil prices, Russian inflation could overcome the critical barrier of 10%, Alexey Gromov warned. This is due to a record rise in prices in the United States and the dependence of the Russian economy on external commodity prices.

If inflation in the United States continues to accelerate, it threatens to increase capital outflow from developing countries, including Russia. In this case, both shares and currencies, including the ruble, may come under pressure. However, due to market undervaluation, the Russian currency by the end of the year will remain in the corridor of 72-75 rubles per dollar, the expert predicted.

What will happen to gas?

According to Aleksey Gromov, Principal Director on Energy Studies at the Institute for Energy and Finance, gas prices will continue to be in the corridor of $ 1-1.2 thousand per thousand cubic meters until the end of 2021. The dynamics should not be expected until the end of the first quarter of 2022.

“For European gas exchanges, the possibility of imposing US sanctions against the certification of Nord Stream 2 is now much more dangerous than rumors about Omicron. If the United States imposes restrictions, stock quotes will instantly soar to peaks - $ 1.5 thousand per thousand cubic meters and above,” the expert emphasized.

According to Kondratiev, under the most optimistic scenario, European gas exchanges may close by the end of December at the level of $ 800-900 per thousand cubic meters. The fuel cost will not fall below this level.