Friday , October 22 2021

Why developments on the oil market excite players


ViennaThis question encourages professionals and consumers: how is the oil market going? Uncertainty is rising and prices fall in parallel. On Friday afternoon, the price for the North Sea Brent fell below the psychological limit of 70 dollars.

A meeting of the Organization of Oil-producing countries (Opec) and many non-OPEC countries at weekend in Abu Dhabi can provide information on the further development of the oil market. The conference can not take any decisions. However, it is considered an important milestone for the further strategy of the oil countries, which will be decided on December 6 at the regular conference Opec in Vienna.

However, the various signals from the 14 members of the oil cartel are currently disturbed by market participants. Saudi Arabia is causing the greatest uncertainty: recently, Riyadh has reversed the price of erosion in oil production. What it should look like is still open.

Although the strategy will not be decided until December, the weekend meeting can be very influential. "The role of such a coil in Abu Dhabi can be rhetorical," says Hannes Loacker, an expert in oil management at the Austrian Raiffeisen, Handelsblatt. Only in June, the oil cartel in Vienna, together with Russia, decided to increase oil production.

In addition to the uncertainty of the game in the game in Saudi Arabia, they also cause irritation: what would happen on the oil market without Opec? "We look at what happens when there is no capacity. One scenario is that OPEC does not exist," said Adam Sieminski, who runs the King Abdullah Oil research center in Riyadh, which is close to the government.

Siemian, a former employee of the US Department of Energy and former chief economist at Deutsche Bank in New York, however, Bloomberg news agency could not say whether this is the plan of the Serbian government. US President Donald Trump has recently attacked the oil cartel due to high prices.

Dangerous games of the Saudis are in a difficult time. Because the oil cartel has lost significance. The oil producing countries' club, established in 1960, is no longer capable of raising or lowering the world oil price for almost a year. For this, Opec needs partner Russia and the support of other non-OPEC countries.

Last but not least, because of the Saudi intelligence games, a lot of mistrust is characteristic of the relationship between the countries of the brick. The conference in early December will therefore not be a routine event, but a test of an arrogant oil cartel.

Many market participants believe that Opec's 180-degree turnaround in support policies is a strategic mistake. According to the newly introduced US sanctions, the supply from Iran will be less than 500,000 barrels per day over the period of four to five months, says Jan Edelmann, an expert on oil at HSH Nordbank, Handelsblatt.

Even production chains in Venezuela are likely, says Edelmann. Given the steady growth in demand for oil, further reduction in funding is not necessary: ​​Opposite we need more oil OPEC.

The United States announced new sanctions Monday against Opec, Iran. However, the export ban on which Trump decides takes some oil buyers, such as China, India and South Korea.

How great is the uncertainty on the market, various price forecasts show by experts. Raiffeisen-Mann Loacker estimates that Brent will again buy $ 80 a barrel at the end of the year. Edelmann also begins with this brand. It expects Iranian oil exports to fall from the current 1.5 million to even 1.2 million barrels per day by the end of the year and one million barrels by the end of the first quarter of 2019.

On the other hand, expert HSH Nordbank expects further steady growth in demand. This in the second half of the year would allow global demand levels to exceed the daily limit of 100 million barrels. This is good, according to analysts, especially for the US. "This year's previous growth was once again surprising," says David Wech of the JBC Energy Infrastructure Institute in Vienna.

"The US oil shale industry is experiencing a growth rate unprecedented three or four years ago," says Edelmann. Last year, the US overtook Russia as the largest oil producer. David Wech of JBC Energy notes that other countries, such as Russia, also produce more oils. This depends on the price.

Forecasts for the coming months are therefore "substantially dark", says an oil expert. His forecast for the price of Brent by the end of the year is only 65 to 77 dollars per barrel.

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