OPEC and Washington could break record oil prices

Excessive volumes of hydrocarbons risk not finding buyers

It took only ten minutes for OPEC + ministers to decide whether to increase oil production by more than 430,000 barrels since May. The members of the cartel believed that the demand for energy resources would only increase in the near future, so they chose to open oil cranes at full capacity. The release of additional hydrocarbons on the market could be even greater if the oilmen did not doubt the expediency of such an action: most producers are confident that they will be able to provide the market with unplanned energy resources, but do not guarantee that the raw materials spilled on the exchange will find a buyer.

Despite all the geopolitical circumstances, OPEC + oil producers continue to be guided by the agreements reached last spring. Then the world’s major producers of “black gold” promised that in the event of a recovery of the planet’s economy after the coronavirus will begin to increase monthly production of liquid hydrocarbons by about 400 thousand barrels.

The next OPEC + summit confirmed the parameters of this decision. The alliance’s key ministers said that the increase in black gold production by the planned 432,000 barrels in May would do no harm to the global energy market and did not respond to Washington’s demand for even higher production quotas due to the global financial crisis.

It is worth noting that in the US the cost of energy resources has reached a maximum – on March 23, tariffs at American gas stations were at least $ 1.1 (about 90-100 rubles per liter). Joe Biden has decided on the “largest in history” release of oil reserves from strategic reserves. So for the next six months, Americans will market an average of one million extra barrels a day.

“The scale of this release is unprecedented. This record release will provide a historic supply that will serve as an intermediate link until the end of the year, when domestic oil production will increase, “the White House said in a statement.

According to Andrey Loboda, BitRiver’s Director of External Relations, the OPEC + decision was well predicted by market participants. Oil is currently trading at eight-year highs, but optimistic forecasts for the price of a barrel of Brent above $ 100 (now quotes show a level of $ 105, but the downward trend in the cost of raw materials is accelerating every day).

Reports on oil reserves from the US Department of Energy, geopolitical tensions and the threat of local lockdowns due to the coronavirus continue to have a significant impact on the price of oil. In early April, oil is likely to remain in the range of $ 104-119 per barrel. Nothing prevents the Russian currency from recovering to 75-77 rubles per dollar. However, it should be understood that geoeconomic risks and inflationary dispersal hide a lot of negatives for the “wooden”, so the strengthening of national banknotes in the absence of strong support from the monetary authorities may be short-term. And, if now the value of the “green” has fallen below 85 rubles, then with the expansion of US supplies and similar actions of OPEC + assessment of the Russian currency risks falling again to 100 rubles per “American”. Moreover, buyers for, including Russian energy resources at such prices may not be.


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