Rosneft CEO predicts new oil era
The sanctions policy towards oil markets may lead to the commodity super-cycle and new record oil prices, Chief Executive Officer of Russia’s top oil producer Igor Sechin said at the St. Petersburg International Economic Forum.
"The sanctions policy towards oil markets will lead to the appearance of a permanent "sanction award" in the price," RIA Novosti cited him as saying. Rosneft CEO did not rule out that in the future there can be a "commodity super-cycle". And new record oil prices are possible in the near future, " Sechin said.
According to the minister, the U.S. decision to quit the nuclear deal with Iran could affect 5% of global oil production.
Sechin also said that sanctions make operations on the global oil sector unpredictable. He added that restrictions used for creating competitive advantages in real sectors of the economy are becoming common practice.
"Unfortunately, no market player or energy consumer can overlook exceptionally non-market factors, first of all various sanctions and restrictions today. As a result, the most dangerous factor for the sector’s development - unpredictability of environment - is rising. Using sanctions for creating competitive advantages in real sectors of the economy is becoming common practice," he said.
A senior analyst of 'Uralsib Capital', Alexei Kokin, speaking with a correspondent of Vestnik Kavkaza, noted that the situation with oil prices hitting previous high levels is quite expected. "A certain share of the world's reserves cannot be developed under sanctions, since this requires either large investments, or technologies, or even both. The only question is what is the total size of the stocks de facto withdrawn from potential exploitation, which are not considered to be real oil reserves. The answer depends on how the sanctions policy will develop further in the world. In the case of Iran, Tehran's reaction to the return of US sanctions and the necrosis of Iranian oil deposits in the next 3-5 years is important. If no sanctions were imposed on Iran's deposits came to international companies, but now it will not happen, and Iran is not able to develop them independently," he said.
The economist added that the volumes of such "dead" oil reserves can be much greater than the market thinks. "It should be taken into account that in addition to Iran there is also Venezuela with very large reserves of tight heavy oil. Maybe the market underestimates the degree to which sanctions affect the necrosis of stocks. Actually, the time is not far off when will see oil prices of $100. The only issue is perspective," Alexey Kokin stressed.
The Professor of the department of state regulation of the economy of the Institute of Public Administration and Management of RANEPA, Olga Malikova, in turn, gave three causes, which are able to keep prices at high level and contribute to their growth in the short term. "The first fundamental factor is rather high economic growth-rates of most countries. The second factor is the rather complicated situation in the Middle East. And the third factor is the economic sanctions imposed on Russia," the expert said.
In addition, she shared her opinion about the possibility of a significant drop in oil prices in the near future. "Theoretically this is possible, but this forecast is very unreliable, since there are always high speculative motives in the oil market. As a rule, the most important factor affecting prices is the growth rate of the world economy. And since the growth level of the world economy is forecast to be high, it is logical to assume that oil prices will be quite high. The tensions in the Middle East should also be taken into account. The worser the situation in this region is, the higher the prices," the professor of the department of state regulation of the economy of the Institute of Public Administration and Management of RANEPA explained.
"If there are no unexpected changes, we should not expect the decline in oil prices in the short term," Olga Malikova concluded.