Oil-2018: Moscow on the trouble saves Riyadh from certain death

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Нефть-2018: Москва на свою беду спасает Эр-Рияд от верной гибели

The energy information administration of the United States (Energy Information Administration (EIA) — ed.) believes that in 2018 the average price of crude oil will be $ 57 per barrel. Note that the EIA was created 40 years ago as an independent Agency in the Federal statistical system the United States and has positioned itself as an objective source of information. At the same time, this office was repeatedly seen in the overestimation of data on production in America and its reserves. Critics accuse the EIA to manipulate the market in favor of the United States.

However, this time the forecast of the energy information Administration in General meets the expectations of speculators and traders. In particular, a survey of traders showed that in the March futures contracts (2018), they predict the cost of a barrel from $ 48 to $ 68 — that is, plus or minus $ 10 from the assessment of EIA. And all 57 green per barrel satisfies all the heavyweights: Americans, Chinese, Russians and Saudis. Thus, Washington actually announced the price in 2018.

But the us-based financial holding company J. P. Morgan & Co in 2018, the oil will cost more expensive than now. Analysts of this Bank agglomerate are convinced that next year will experience a moderate cyclical growth of the world GDP, which “has a direct impact on the demand of petroleum products”. In addition, the tax reform trump creates the most favored American oil companies, including those specializing in the technology of hydraulic fracturing.

Of course, the experts of J. P. Morgan & Co given political conditions that exist today, and is largely based on the current rally. So, on December 25, 2017 a barrel of Brent sold for more than $ 65 which is a 30-month high, or almost two and a half times more expensive than 13 years ago, when oil was trading for $ 26,5.

However, even this relatively high price does not reflect the real situation. “A 25 percent rise in the dollar (in 2015-2917 years) compensate for a 25 percent drop in hydrocarbon prices,” the EIA notes. In other words, $ 65 per barrel today is equivalent to $ 85 in 2014. Of course, it’s not the coveted 100 “greenest” in the barrel, but not 35, and not 25, when Russian officials were shouting “all is lost”.

In this regard, not to wonder, why isn’t restored our currency at least up to 40 rubles per Euro? Because the government of the Russian Federation explained the enormous devaluation of the ruble falling almost three times the cost of oil.

But back to the world market of hydrocarbons. The international energy Agency, not sure that will be a sharp increase in world oil consumption in the year of the Dog. Since the beginning of 2014 by the end of 2017, global demand increased from 92.4 million b/d to 93.3 million b/d solely due to China, but now China has already slowed its speed.

A more modest forecast of EIA, than one that makes J. P. Morgan & Co, staff of the energy information Administration to explain not only predictable small increase in world GDP, but the increase of oil production by the Islamic Republic of Iran and the United States. The first promises to double exports to 2.4 million b/d, and the United States in 2018, plans to increase crude oil production to the highest value in American history — to 9.8 million b/D. by the Way, the transatlantic record contributes to the current level of prices, which makes profitable fracturing technology.

In these circumstances, the laws of “wild market”, first of all, get rid of the weakest player. Of course — it will not be the Americans. According to observers of the oil market Kimberly Amadeo, which refers to assumptions a successful speculators, the Saudis, coupled with White house officials behind the scenes are plotting a dangerous game to return the Iranian “sanctions stall”, as well as to overthrow Assad in Syria. The only way, they say, can support a higher oil price. This is firstly, and secondly, still to extend pipelines from the Arabian Sands to Europe in order to weaken Russia. In short, their plans Gulf countries refused.

In other words, oil is a projection of high politics, and the forecast of its price tied to the analysis of the situation in the key oil-producing area — the middle East. And the situation here it is far from simple and has all the prerequisites of the audit of the victory over ISIS (DAISH).

The defeated “Islamic state” embodied the paradigm of Wahhabi Sunni Islam, which is also the state religion of the Kingdom of the Saudis. And now the soldiers are Shiites from the Iraqi army, the guards of the Islamic revolutionary Guards and Hezbollah celebrate their victory and massively (in court and out) shot the militant Wahhabis, and Saudis. The Sunni branch of Islam, of course, wants revenge, despite the official condemnation of ISIS by the authorities of the Kingdom.

In this regard, the establishment of OPEC+ (OPEC plus Russia — ed.) in the opinion of many American experts, is an unnatural measure of Riyadh, and coordinated with Washington. By and large, the CSA was no other way, except for temporary oil Alliance with Russia. If prices remained low in the range of $ 25-35 per barrel, the Saudi Kingdom spent its gold reserves by 2020, and in 2018, the leadership of the country would have to go to the devaluation of the Rial. Given the system of government in the Kingdom, it would be logical to wait for a series of Palace coups.

The Americans also were interested in higher prices per barrel, to somehow save around $ 2 trillion. invested in “slate”. When it became clear that the “Russian bear” has failed to knock down a double blow — the collapse of the oil market and financial sanctions, Riyadh with good from Washington, rushed to negotiate with Moscow. Of course, the low price and Russia would be difficult. But if it would be introduced a progressive tax on excess profits, then with very high probability a deal OPEC+ could not to go.

But what’s done is done. USA, Russia and KSA for several years, received a respite, in which for the needs of the Saudis. And during this time, and the ocean has led to the consolidation of the oil industry. Weak and technologically backward companies were absorbed by larger players. Already have to reckon with the fact that the average overseas “slate” becomes profitable even at the price of $ 45-50, not $ 60-70 like three years ago.

If OPEC+ continue, by 2025 the average price of a barrel of crude oil will rise to $ 86 per barrel, experts say EIA. And by 2026, the United States will become a net exporter of hydrocarbons, although it was the importer since 1953. The peak of oil production will reach America by the year 2030, after which production “slate” will start to slow down. By this time the barrel will rise to $ 95 to $ 109 by 2040.

You have to understand that the US will use all that they have military and political leverage to promote their hydrocarbons on the world market, forcing Iran and Russia. The Saudis at these prices, too, will survive and will sooner or later begin again to smother Syria, to cut through the oil and gas window to Europe.

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