Brent oil hits $80
Brent crude oil is trading at over $80 per barrel for the first time since November 25, 2014, after the US broke the Iran nuclear deal and Total said it would likely withdraw from its South Pars commitments due to US sanctions.
Today Brent oil reached a daily high of $80.12 per barrel (up by 0.8%).
U.S. West Texas Intermediate (WTI) crude futures were up 64 cents at $72.13 a barrel, also their highest since November 2014.
Deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, speaking to Vestnik Kavkaza, characterized the growth in oil prices as speculative, caused by concerns about a reduction in Iranian oil exports due to the US decision to exit from the JCPOA.
"This factor has been fueling the market for the last six months, and there are no fundamental reasons related to the balance of supply and demand, or financial factors. Relatively stable oil prices can still be estimated at $55-60. And the growth observed in the last month resembles a speculative bubble," the expert pointed out.
According to him, geopolitical factors constantly keep traders in suspense. "Therefore, the role of geopolitical factors this year is much higher than in the previous three years, which somewhat changes the behavior of players in the market. Now it is more focused on purely temporary factors," the deputy director of energy policy of the Institute of Energy and Finances explained.
"On the one hand, this is good for oil suppliers, because the average annual price of Brent oil for 4.5 months turned out to be much higher than expected, reaching $68-69 per barrel, and last year it was just above $50. And this is a positive factor for Russian companies, for the Russian budget. But on the other hand, the risk of a sharp reduction in prices increases with the growth of prices," Alexei Belogoriev warned.
The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, in turn, believes that we are talking about a long-term trend, since such things as oil price changes are not short-term. "Nobody expected such an increase in oil prices. I myself repeatedly said that, most likely, the price will keep at $60-65 per barrel, but adding one phrase:" If there is no trouble in the Middle East." But 'the trouble' happened, bit it was more likely in the information field than in reality, because there was no need for Donald Trump to transfer the US embassy to Jerusalem right now and exit from the Iran deal. Everyone knows that Iran is in compliance. The thing is that Trump promised the Americans that he will do anything to create jobs, which he did," the expert said.
According to him, due to rising oil prices, work on slate projects in the United States was sharply intensified, in particular, small and medium-sized businesses began to participate in them again. "This created a huge number of jobs," Valery Bessel noted.
The expert expressed confidence that the cold informational military phase will not enter the hot phase, which is very dangerous because it is the Middle East, where there are India and Pakistan with nuclear weapons next door, as well as Russia. "But news opportunity was created. The price of oil has started to grow. In addition, if the US economy grows, and there is a growth of the EU economy, then more energy is needed, which will cause a gradual increase in oil prices," the executive vice-president of NewTech Service explained.
"I wish Russia would not take advantage of this and not fall into the situation of the mid-2000s and early 2010. It seems to me that at such oil prices we could maintain the dynamics of development that we have accumulated in recent years, then we may have a historic chance to return to the full notion of a "superpower." The main thing is not to stop and continue to develop the non-oil sector," Valery Bessel concluded.