Should we expect an unprecedented increase in oil prices?

Should we expect an unprecedented increase in oil prices?

Yesterday oil prices reached a new low: the cost of the futures of Brent crude oil on London's ICE trading decreased by 6.49% to $28.88 per barrel for the first time since February 2004, WTI decreased by 6.41% to $29.20 per barrel.

A leading expert of the Union of Russian Oil and Gas, Rustam Tankayev, suggests that the price of oil during the second half of 2016 will begin to grow in leaps and bounds, and could reach $100 at the peak, but then it will begin to roll back.

"The conditions, a stable situation have been created on the market, so prices could rise, but prices continue to fall. This is generally an issue that worries everybody. In fact, the main reason is the continuing dumping, which is carried out by Saudi Arabia and other Middle Eastern states. However, Iraq has slowed somewhat. They somehow are not so interested. But Saudi Arabia continues this game. The second author of these low prices is Russia. We are in no way trying to think about how to regulate somehow the production and export of oil. And we are steadily increasing the exports," the expert said.

"This year, in January, this month, we reached the absolute record for exports of oil in our history. Of course, everyone is looking at the leader and understands that if the leader does nothing to regulate the supply of oil on the world market, respectively, the prices fall, because when there is a surplus of oil, the prices are high. The third author of these low prices is China. Absolutely, without any desire on its part, China has entered the stream of falling economic indicators during the period of reduction in the rate of economic growth and has also influenced very much the opinion of traders," Rustam Tankayev said.

"What will happen in 2016? It is a completely inevitable rise in the oil prices. Because the price level that we have now does not allow a sufficient amount of oil on to the world market. We now have a shortage of oil, and demand for oil exceeds supply. But the main consumers have accumulated huge reserves, unprecedented in the history of its existence. This is the United States, China and Germany. And these stocks are applying pressure on the market and do not allow the market to feel the shortage of oil. But it is there. At some point, of course, a deficit will appear," a leading expert of the Union of Russian Oil and Gas stressed.

"You do not need much. A straw remains that will break the camel's back. This straw can be anything. It could be a sharp drop in temperature, for example in the United States. It could be a worsening of the military situation in Saudi Arabia and Yemen, this is likely and possible. It could be, for example, the publication, for example, about positive data on China, which is also quite probable and possible. It could be any other reason. There can be many reasons, but there will be only one result. Ultimately, we will not see a smooth rise in prices, but a sharp jump. Because the deficit is quite large at the moment," Rustam Tankayev concluded.

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