Oil recognized as scarce – Kommersant FM

The world oil market may experience the largest deficit in the last 15 years, Bloomberg writes, citing an OPEC report. We are talking about a supply shortage of 3.3 million barrels per day. This situation arose, among other things, due to Saudi Arabia’s decision to reduce production by 1 million barrels per day until the end of the year.

Against the backdrop of a growing deficit, Brent oil prices recently rose above $90 per barrel. And by the end of the year they may increase even more, says independent expert Dmitry Lyutyagin. In his opinion, OPEC’s concerns seem justified:

“The first factor is that there is now an increase in the volume of demand and consumption of oil in countries outside the Organization for Economic Cooperation and Development, primarily due to the positions of China and India.

According to forecasts given by OPEC, in 2023 in countries outside the OECD there will be an increase in demand for raw materials of 2.3 million barrels per day.

In OECD countries, mainly the US, EU and Japan, in 2023 this figure will increase by only 120 thousand barrels per day.

It can be seen that the main bias is in developing economies, that is, they are pushing the demand and consumption of oil upward.

At the same time, OPEC+ member countries during this year decided to reduce the supply of raw materials to the market. Saudi Arabia and the Russian Federation today supply probably minimal volumes relative to historical values ​​that were before.

So the dynamics that we saw after the last adoption decisions to reduce production in Saudi Arabia and Russia in early September, could add another $10 per barrel to the price of oil in Brent from today’s levels. That is, in fact, by the end of 2023 we can see a price of $100-105.”

Other analytical institutes also talk about the shortage of raw materials on the world market, although they differ in their assessments. For example, the US Department of Energy believes that the shortage of raw materials will not exceed 300 thousand barrels per day, which is 10 times less than estimates by Bloomberg analysts.

However, the trend may continue next year, and non-OPEC countries are unlikely to influence the situation, noted Sergei Kondratiev, director of economics at the Institute of Energy and Finance:

“If we are talking about fundamental factors, then other countries, in particular Brazil and the USA, cannot significantly increase production outside OPEC+ countries.

Therefore, it is highly likely that market participants are limited by possible unplanned sales from strategic reserves. America and European countries may try to return to this, but I am not sure that this will be an effective strategy now.

After all, market participants know that strategic reserves are already at low levels.

Their further sale means the preservation and growth of oil prices in the future if Saudi Arabia, Russia and the participants in the OPEC+ agreement remain highly disciplined and adhere to the agreements in terms of reducing oil production.”

Bloomberg suggests that oil shortages could increase inflationary pressure on global economies. Some European countries are already seeing increases in diesel prices, and airlines in the US are warning of rising jet fuel costs.

Meanwhile, Russia’s oil export revenues in August reached their highest level since the fall of 2022, according to a report by the International Energy Agency. They grew by almost $2 billion.

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Elena Ivanova