Leonid Grigoryev: "If I was god of oil market, I would keep it in corridor of $60-70"
Today, the main events of the Syrian National Dialogue Congress have started in Sochi. It is assumed that different layers of the Syrian society, including those from opposition, will be able to communicate with each other without intermediaries. The scientific director of the Department of World Economy at the National Research University Higher School of Economics, Leonid Grigoriev, told Vestnik Kavkaza about the Syrian restoration, the Iranian economy and oil prices.
- What do you expect from the Syrian National Dialogue Congress in Sochi?
- Dialogue is necessary in order to ensure a normal life, economic recovery and prosperity. It is important to restore deposits, repair pipes and start exports in eastern Syria. Then there will be money for restoring the destroyed cites. International assistance to the Syrian government will be limited now - we do not have such resources, we have done a lot to establish peace in Syria. Now there should be a socio-economic revival, especially in the eastern part of Syria.
Many people do not know that the 2011 events were preceded by a five-year drought caused by climate change. Due to the drought, people were forced to leave their homes from northern Aleppo to Damascus for places where radicalization and civil strife have began. Therefore, the future of Syria is tied to the economy.
Economic growth in the region after the Arab Spring has slowed, but the population is still growing. Young people grew up in a period of conflicts, in a difficult situation, when the population had a large number of weapons. Therefore, the world community is interested in stabilization and transition from civil conflicts to economic growth in order to prevent possible outbursts of confrontation in 10 years. The Middle East needs economic growth and accurate reinvestment of oil revenues, guest worker money. Therefore, the inter-Syrian dialogue is a step towards possible economic stabilization.
- The Iranian delegation in Sochi will be headed by Deputy Foreign Minister Hossein Ansari. How do you assess Iran's economic situation?
- A positive story about Iran, which somehow missed out by our press, is that there is a "matryoshka" in the OPEC + agreement - Iran smoothly reached a very large oil output, and this volume was accepted by the market without resistance from competitors. That is, Iran was allowed to restore normal exports and thus it received significant revenues. When oil prices increased by $30 in the world in the period from January 2016 to January 2018, Iranian oil entered the market and did not destabilize it. From the perspective of oil ratings, this is a huge success and, according to my calculations, Iran is receiving very large revenues and it has financial resources now.
- What are your oil price forecasts?
- In 2014 they declined when there was an excess in the market and large stocks. The specificity of oil prices is that they can crash in panic, or rise, as it was after the Fukushima Daiichi nuclear disaster and the Libyan events in 2011. The meaning of the current events is not only that it was possible to reduce output, but that excess reserves are reduced at such level of output and demand. Russian Energy Minister Alexander Novak said recently that excess reserves will be dissolved in a year and there will be a normal market. And this requires such stability.
High oil prices would be good for our Finance Ministry, but dangerous for the market, because already at a price of $70, the US starts increasing output. But do not take the US output as a tricky move against us, because companies pump oil to make a profit, not to fight us. Therefore, in principle, the current global situation suits everyone. If I was a local god of the oil market, I would keep it in the corridor of $60-70 and say like a cat Leopold: "Come on guys, let's get along!"
Most forecasts are built around $70-75. In a year, oil production and consumption increases by about 1-1.3 million barrels per day. This means that in 2019 we will reach 100 million barrels per day of consumption and production. It will be a big global oil celebration.