| Despite OPEC's decision to increase quotas After a slight decline in oil prices, the reason for which was the announcement of the Organization of Petroleum Exporting Countries (OPEC) to increase production quotas by 1.5 million barrels per day, the cost of raw materials began to rise steadily again. Yesterday, the price of Brent oil under futures contracts for February this year on the London Stock Exchange rose from $30.2 to $30.75 per barrel. The market was not reassured by OPEC's statements, and it is unlikely to expect a significant drop in prices in the near future.
According to Troika Dialog analyst Valery Nesterov, the situation is determined by three factors. The first is still the “Iraq issue” and the expectation of the outbreak of war in the Middle East. In this regard, the expert does not rule out that prices could reach $35-40 per barrel, while the “crisis premium” for buying oil is now about $10 per barrel. Of these, for the Venezuelan anti-government crisis, in his opinion, the market has to pay only about 2-3 dollars per barrel.
The analyst calls the second factor the market’s doubts that OPEC countries will be able to actually increase production. After all, quotas at the meeting in Vienna were increased in proportion to the production volumes of the participating countries, but not all members of the organization have the capacity necessary to increase production. For example, Saudi Arabia can easily increase production from 8 million to 10 million barrels per day, while Indonesia does not have the opportunity to increase its volume.
The third factor was the market's understanding that non-OPEC countries would not be able to significantly increase their exports. In particular, Norway has already announced that it is working at the limit of its capacity and will not increase supplies. True, Mexico is ready to increase its exports by 120 thousand barrels per day, but compared to the losses suffered by the market (it does not receive almost 2 million barrels every day due to the Venezuelan crisis), this volume can hardly be considered significant. We can hardly expect an increase in exports from Russia either. Despite requests from oil workers, the commission for the distribution of access to pipelines, headed by Deputy Prime Minister Viktor Khristenko, reported that there would be no increase in exports, at least in the first quarter.
Mikhail Perfilov, an analyst at the oil agency Petroleum Argus, also sees no reason for prices to fall. “The Venezuelan strike has not stopped, and besides, buyers will not receive the oil that was discussed at the meeting in Vienna until March,” he notes. Moreover, there is an urgent need for it right now, at the height of the heating season in the United States, where a very difficult situation has already developed. On the one hand, the country needs to satisfy the demand for gasoline, on the other hand, it is necessary to use oil as fuel, and there is practically nothing to compensate for Venezuelan oil, which is traditionally processed in America. “Any serious cold spell that lasts more than a week can turn into a crisis,” the expert believes.
In addition, the analyst says, it cannot be ruled out that OPEC’s decision to increase production may be invalidated. After all, for the resolution to come into force, it must be signed by all members of the organization, while representatives of Iraq and Indonesia were not present at the meeting at all, and representatives of Iran, Kuwait and Libya sent officials of inappropriate rank. Denis REBROV |
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