Oil drilling rig

Oil prices could reach $ 90 in the coming months, experts interviewed by Izvestia predicted… Growth will be driven by an insufficient supply of raw materials amid the global economic recovery after the pandemic and the rise in prices for all other energy resources, such as gas and coal, analysts said. On October 11, the price of a barrel of Brent reached $ 84.5, according to ICE trading data. Previously, the cost of raw materials rose to this level in January 2018. The rise in oil prices may lead to an acceleration in inflation, primarily in Western countries, analysts also said.

At the maximum

Oil prices rose to their highest values ​​in the past few years. October 11 at 8:30 Moscow time, December Brent futures reached $ 83.58, around 14:00 Moscow time barrel rose above $ 84.5, according to ICE trading data. Previously, the cost of raw materials was at this level in January 2018.

In the coming months, the price of Brent may reach up to $ 87 per barrel, and if it overcomes this mark, an increase up to $ 90 is possible, said Natalia Milchakova, deputy head of the IAC “Alpari”.

– The main reason for the rise in oil prices is a new raw material cycle. Prices have risen for almost all raw materials – we have entered a new global growth in commodity markets, and even a pandemic is not an obstacle to that. Local lockdowns, which are continuing somewhere, generally do not affect consumption, it is growing in the world, – said the head of the Center for Analysis of Strategy and Development Technologies of the Fuel and Energy Complex of the Russian State University of Oil and Gas. THEM. Gubkina Vyacheslav Mishchenko.

Photo: TASS / URA.RU / Alexey Andronov

Oil rises amid the energy crisis in the West, which is developing as the global economy recovers from the coronavirus pandemic, agrees analyst of FG “Finam” Andrey Maslov. Oil supply lags behind demand, and the approaching cold season in the EU and the United States further exacerbates the problem, the expert said. Oil rises in price in many ways as a substitute product (analogue) of gas and coal, the prices of which have risen to record levels in the history of observations, he added.

According to Andrey Loboda, an expert in the field of financial communications, against the background of a general rise in prices for raw materials in the second half of October 2021, Brent may rise to $ 88, and in December, quotations are likely to overcome the $ 90 level.

As Izvestia wrote, on October 6, the price of gas futures in Europe reached a new all-time high, exceeding $ 1900 per 1,000 cubic meters. m. Experts noted that the rise in the price of blue fuel in the EU is due to the reduced generation of alternative generation (for example, wind power generation), the low volume of gas reserves in European underground gas storage facilities after the cold winter and hot summer period, and the growth in demand for energy resources in China.

“In India and China, not only factories and industrial enterprises, but also residents are already suffering from a lack of energy resources, since power outages began in some states and provinces,” Andrei Maslov noted.

Oil pumps in Tatarstan

Photo: TASS / Egor Aleev

The EU also faces a rather cold winter, unless some special agreements are reached with Russia and the United States regarding gas supplies., the expert noted. The switch to petroleum products and coal for Europe is unlikely to cover a significant share of the demand for electricity generation, which is also traditionally used to heat homes, he added.

Economic environment

As stated by the head of the European Parliament, Josep Borrell, the EU’s demand for Russian gas is greater than provided for by the current supply contracts. At the same time, Gazprom is close to a record for gas supplies to Europe this year and the company is ready to ensure all exceeding contracts, as reported earlier by the press secretary of the Russian President Dmitry Peskov.

For Russian exporters, the current economic situation is favorable, the rise in energy prices contributes to an increase in companies’ revenues and tax collections to the budget, said the chief strategist of the Beta Financial Technologies index company Ararat Mkrtchyan. However, no significant changes should take place in the long term, says Dmitry Alexandrov, head of analytical research at Univer Capital.

For the Russian stock market, high energy prices are good news, since oil and gas companies form the basis of stock indices in Russia, – said Andrey Loboda.

Shares of Russian energy and oil and gas companies are likely to rise in price by almost 30% by the middle of winter, the expert said.

Oil drilling rig

Фото: Global Look Press/Rosneft

But the main consequence of such a significant increase in energy prices for Western countries may be an acceleration in inflation, noted Natalia Milchakova.

At the same time, the launch of Nord Stream 2, which will fill the European market with additional volumes, can improve the situation for the Old World., as well as a decrease in energy consumption in China, noted Andrei Loboda. It is also likely that the United States will continue to persuade the OPEC + countries to increase oil production, the expert said.

However, as Izvestia wrote, the OPEC + countries discussed the future of the deal and the volume of oil production on October 4, deciding to adhere to the plan adopted in July to increase it by 400 thousand barrels per day per month. This decision was made despite the fact that on the eve of the US representatives said that increasing production by 400 thousand barrels per day per month is not enough during the global economic recovery. The experts explained this decision by the fact that OPEC + intends to act based on the situation in the world market, and not focusing on the interests of Western politicians. The main drivers of price growth have already been implemented, the range of expected oil prices in the coming months is $ 80-87 per barrel, says Ararat Mkrtchyan.

Izvestia sent a request to the Ministry of Energy.

Leave a Reply