Would it make oil more expensive?

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Станет ли нефть дороже?

In the oil negotiations in Doha was attended by representatives of 18 countries.

– Negotiations on the freezing of oil production, which ended last weekend in Doha, happily failed. As one would expect. Especially given the consistently poor relationship of Iran and Saudi Arabia, who not so long ago nearly resulted in something like “hybrid warfare”. Iran, after protracted negotiations, did not send a representative to Doha, and accompanied his refusal with the statement of oil Minister Bijan Zanganeh, that the Islamic Republic is not going to sign the agreement on freezing of production.

Following this logically changed the position of Saudi Arabia, which refused the approval of the transaction without the participation of Iran. Many observers hurried after that, the predictions about the coming collapse in oil prices, but so far nothing like this has been. In Russia for some time for oil prices many people look is almost more closely than the dollar, although they are linked stronger than our national currency, more prone to permanent devaluations.

To expect Iran to something else instead of attempting to restore its position in the market, which were before the sanctions, it would not be reasonable. There is oil production continues to grow, although it is inferior to the Russian or Saudi more than ten times, and his own desanctions – almost three times. However, still not worth it to fear that Iranian oil is indeed capable of drastically change the market situation. Iran is in fact only gradually closes those spaces that are vacant as a result of the decline in the number of “small” producing countries (Syria or Libya) and a series of bankruptcies of shale oil companies in the US. Information about the latter, incidentally, is not so carefully hidden.

To bargain with Russia, not a member of OPEC, too, in fact it was useless for us, the production volumes are traditionally severely limited by natural and technical factors. But also in relations with our country in OPEC there is a hidden trump card – Russia has now virtually exhausted the possibility to increase its production volumes. After that we need huge investments in new technologies and exploration, and investment requires a completely different price level.

So, OPEC, the first year really represents nothing more than a “social club”, again signed in his own impotence. And let at this particular moment it is not so scary, and most producing countries is not really so much require a price above $ 100 per barrel, it is more important to the market was not shaking so much as in recent months. In any case you have to look for some other more robust forms of interaction.

Last fall (in the article “Why OPEC Russia not the decree?” from 14.09.2015), we noted that the organization of countries-exporters of oil is experiencing a systemic crisis, ruptured by some groups that do not perform even their commitments. The lifting of the sanctions on Iran, a member of OPEC, the situation has not changed, but only worsened. In most organizations recognize that effective cartel, OPEC does not work. The message from Tehran to other countries, including Russia, that “they should accept the return of Iran to the oil market”, OPEC chose not to take into account. And this despite the fact that in Iran understood that if the country will keep its oil output at the level of February, she does not gain any benefit in connection with the lifting of sanctions.

Summary of price haggling in Doha known, and perhaps the most unpleasant, that he was not merely predictable but predicted accurately. And now, it seems, can only agree with the conclusions of the Agency Bloomberg: “the Big deal that was discussed in February as the first coordinated action between OPEC countries and other oil-producing countries for 15 years, fell victim to tensions between Saudi Arabia and its main regional enemy Iran.” And at the same time to recall the words of chief oil analyst of the firm Energy Aspects Ltd., the oil policy Riyadh was “extremely politicized.”

Now news confused – why the oil price since Doha has not fallen? Decreased a little bit. Our colleagues cheerfully write about the strike by workers from the oil fields in Kuwait, but it does not look serious. Apparently, the thing is that oil is bought, as they say speculators, “against the news” extremely strategic players. And this is the same who in February bought the oil against data in a record growth of reserves. When the oil price have to fall further, but somehow began to grow.

But all this does not mean that is not so cheap oil will buy up like hot cakes and further. More probable that the from the same Bloomberg – buyers will take a short pause and the market will give a little “crawl”. The oil will take a bit of below $ 40 per barrel, but up to 35, and even 37 dollars may not be omitted. In the end, and after a landmark OPEC meeting in Doha, with oil everything will be synchronous to the dollar – how one grows up, so she falls.

In conclusion, it should be noted that in a slightly different, not as raw model of economy which developed in post-reform Russia, oil prices could be as indifferent as the dollar. Earning primarily for internal circulation, it would be possible, if desired, just keep a steady fuel prices that is directly tied to oil. At that level, which is able to provide not only the normal development of oil production and refining, but also to give considerable funds for the exploration of mineral resources. And even more so – to allow this policy to be pricing in the fuel sector, which will provide competitive advantages for domestic manufacturers. Of course, in the first place – in the domestic market. However, those who focused on export, not too interfere.

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