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World oil prices began to rise again by the end of the working week – during Friday trading on the London ICE exchange, the price of Brent oil futures for delivery in April exceeded $82 per barrel for the first time since the end of last year.
Noting the significant inertia of the market, which has been in equilibrium for quite a long time, despite all the events in the Middle East, the economic problems of China and the decline in production in the United States, traders expect that in the near future the dynamics of changes in oil prices will become much higher.
“Four months into the conflict between Israel and Hamas in the Gaza Strip, the price of oil is hovering around $80 a barrel, lower than before the fighting began in early October. Investors’ eerie calm reflects expectations of weak demand, ample supply and mild US sanctions on Iran. But all three factors can change,” writes Reuters.
On the other hand, there is also a built-in “pressure relief valve” on the market. OPEC+ countries such as Saudi Arabia, trying to support prices, are collectively producing about 5 million barrels of oil per day less than they could. “If there are market disruptions, US President Joe Biden could ask Saudi Crown Prince Mohammed bin Salman to open the taps,” the agency believes.
One of these disruptions could result from the escalation of activity by the Houthis (militants of the Yemeni Shiite movement Ansar Allah), who continue to threaten shipping in the Red Sea. Houthi attacks on commercial ships, including oil tankers, off the coast of Yemen (primarily in the Gulf of Aden) have already led to the fact that maritime traffic has to be rerouted around Africa instead of the fastest route from Asia to Europe, which runs through the Suez Canal. Because of this, the duration of oil deliveries via tankers increases by an average of two weeks. In addition to wasting time, this also leads to the need to spend more fuel. As a result, according to experts, only because of the actions of the Houthis, the growth in global oil demand this year could increase by 1.4 million barrels per day.
Europe will have to decide who is worse – China or Trumpist America. It is quite possible that the EU will soon be waging two transcontinental trade wars at once.
OPEC, for its part, also forecasts additional demand in 2024 at 2.25 million barrels per day due to a sharp increase in purchases by petrochemical enterprises in China and the Middle East. This far exceeds the expected growth in oil supplies from countries outside the oil cartel. In addition, the expected rate cut by the US Federal Reserve can also stimulate global GDP growth and boost oil demand.
The biggest risk for importing countries is that Iran will play its main trump card and block the Strait of Hormuz. It is a strategically important waterway connecting the Persian Gulf in the southwest to the Gulf of Oman in the southeast and beyond to the open ocean.
If the Strait of Hormuz, through which about 21 million barrels of oil passes every day (about a fifth of global consumption), were closed by Iran, it would almost certainly push oil prices well above $100 a barrel.
However, this is the most radical possible scenario for the development of the situation in the energy markets this year. Much more likely is another, also connected with Iran. Although sanctions on oil exports from this country, imposed by the United States during the presidency of Donald Trump, remain in force, control over their compliance is becoming increasingly weak. Iranian oil exports, which stood at 500,000 barrels per day back in 2020, have now increased to almost 1.5 million barrels per day, according to data analytics firm Vortex.
“Ahead of the US presidential election, when domestic gasoline prices play an important role, Biden will not take risks by seeking a reduction in Iranian exports, which will hit the pockets of his voters among American car owners,” Reuters believes.
Is Netanyahu ready to defeat Hamas without US help? The contradictions between the Joe Biden administration and the Israeli government continue to escalate and have already led to American sanctions against Jews.
Judging by the streamlined statements of Washington officials, this is indeed the case. “The United States continues to hold Iran accountable for its actions in escalating the situation in the Middle East. We will continue our efforts to undermine Iran’s ability to finance terrorist groups in the region,” White House National Security Council spokeswoman Adrian Watson said.
In turn, Bloomberg, while agreeing with the view that the Biden administration would not be averse to tightening controls over Iran’s oil sales to limit its financial ability to support militants in the Middle East, notes that too much pressure on Tehran threatens to lead to increased oil prices, hitting both sluggish global growth and Biden’s chances of winning his rematch with Trump in the US presidential election.
But even if Washington does try to tighten sanctions, it will have difficulty achieving any effect because Iran has in recent years managed to create a wide network that allows it to send cargo and make payments bypassing American restrictions. “Such actions, including the creation of a ‘shadow’ fleet of oil tankers, helped Russia mitigate the consequences of the oil price ceiling imposed on it by Western countries,” Bloomberg summarizes.
Be that as it may, according to JPMorgan’s forecast, as cited by CNBC, in the next three months the price of Brent oil will rise by $10 per barrel and reach $90 per barrel, and this will not require an escalation of geopolitical risks. The main role is expected to be played by the decline in global inventories, which are at their lowest level since 2017.
Let us recall that Russian Deputy Prime Minister Alexander Novak called a scenario comfortable for Russia in which oil prices will remain above $70 per barrel. At the same time, as follows from the “Main Directions of Budget, Tax and Customs Tariff Policy for 2024 and the Planning Period of 2025 and 2026” published by the Ministry of Finance of the Russian Federation, in 2024 oil and gas revenues of the federal budget should increase by almost a third compared to last year – from 8.86 trillion rubles to 11.5 trillion rubles.
Mikhail Makarov
#Oil #rushes #aid #Russia #Trump
2024-02-10 09:17:00
