The world is preparing for a collapse in oil prices: what surprises await Russia

The interests of OPEC countries and the United States clashed violently in the commodity market.

The price of a barrel of Brent on world exchanges exceeded $95 for the first time in a year. Some batches are already trading above $100 per barrel. Maneuvers to reduce production undertaken by the main producers of “black gold”, including Russia, may soon lead to the fact that such a psychological price level will become familiar for all reference varieties. However, it is possible that the scales will soon swing in the opposite direction: American companies, together with their satellites, intend to significantly increase production and bring down prices with their excess barrels.

The cost of the Russian Urals variety, as a result of the general trend and due to a reduction in the discount provided to foreign buyers, has risen in price by almost 10% – to $77 per barrel. Moreover, the domestic low-sulfur ESPO grade, pumped from the Far East mainly to local independent refineries in China, began to sell at a slight premium (50 cents) to Brent, according to traders. Such a reversal led to the fact that Russia’s revenue from the export of “black gold” in August increased by almost $2 billion and exceeded $17 billion. As Vladimir Putin said at the last meeting on the formation of the federal budget for 2024-2026, our country’s oil and gas revenues in the second half of summer they recovered to last year’s level and continue to demonstrate active growth.

Experts from Middle Eastern producing countries believe that the current situation in the planet’s commodity market is more favorable than ever to further strengthening the stock price of energy resources. According to OPEC experts, global oil demand, after increasing by 2.4 million barrels per day in 2023, will increase by another 2.25 million barrels in 2024. Buying interest will continue to be supported by the exit of the Chinese economy from the regime of covid restrictions, as well as “surprises” in terms of accelerating financial growth, which representatives of the organization of “black gold” exporters expect from developing countries in Asia, as well as from Brazil and Russia.

Meanwhile, the main credit for the fact that oil prices are soaring to the heights of $100 per barrel belongs to Russia and our OPEC+ partners, who have significantly reduced their production and removed a total of about 2 million “barrels” of raw materials per day from trading floors. “It is too early to discuss the details of the agreement between the alliance participants, but we can already warn about the possible occurrence of a shortage of hydrocarbons on the world market,” says Artem Deev, head of the analytical department at AMarkets. “Since American President Joe Biden has already announced the threat of a serious rise in gasoline prices in the United States next year, we should prepare for increased excitement on commodity exchanges in the coming months.”

If in the foreseeable future there is no global force majeure that could disrupt the production and supply of hydrocarbons to sales sites, then in the fourth quarter of this year, a barrel of Brent will trade in the range of $90-100 with a likely forecast increase to $110. “In 2024, after an increase in exports from Russia, Saudi Arabia and other OPEC+ countries, oil prices will most likely stabilize in the range of $80-100 per barrel of Brent,” believes Freedom Finance Global analyst Vladimir Chernov.

It is worth noting that Western experts, in particular from the International Energy Agency, on the contrary, insist on a more modest increase in global consumer appetite and are confident in a moderate strengthening of demand and quotations. Moreover, many of them believe that producing states that are not members of OPEC+ can negatively affect the global oil market. As Citigroup predicts, the supply of raw materials from Canada, Brazil, Argentina, Guyana and Norway outside the alliance will increase by almost 3 million barrels per day in 2023-2024. More than one million more “barrels” of additional hydrocarbons are promised to come from American companies, which, in contrast to most of the major Middle Eastern producing powers, intend to also open their taps to full capacity. Such a policy, according to analysts at the New York banking conglomerate, will only allow quotes to remain at a three-digit level for a short time, and then drop the cost of energy resources noticeably below $90.