If you have been trading crude oil for a while, you are aware of the fact that Russia is a major player in the international market of crude oil. It is a major producer and exporter of crude oil, which means its economy and national currency is heavily dependent on oil exports and oil prices. The lower the prices go, the less considerable profit Russia gets from exporting crude oil.
Still, some representatives of the Russian political elite assume that the optimal price for balancing the international market of crude oil is the price range of 45-50 dollars per barrel. Reuters shares this standpoint. Over the past trading week as well as the weekend, the international community discussed the possible result of the oil summit in Qatar, which ended yesterday. Observers assumed that if the price went further up, shale oil producers might get active again.
However, Iran refused to participated in the oil summit and completely rejected the idea to cap its oil production. They say that’s the key reason why the summit eventually failed and the participants didn’t agree on the matter. You see, Iran is trying to catch up with the lost years under Western sanctions. As you know, Iran returned to the international market of crude oil only in January 2016 and has been actively producing crude oil and increasing its oil exports to Europe and other outlets. With that being said, Iran is still busy restoring the production level that used to be prior to the sanctions.
At the same time, Russian Minister of Energy Alexander Novak said that most of the participants changed their mind right before the summit. They demanded cooperation from other major oil exporters outside of OPEC. He is sure that the failed summit is not going to deteriorate the situation in the Russian economy in general and the Russian energy sector in particular. Still, Russia is willing to participate in another oil summit planed for July 2016. Still, this time Russia is not going to be as optimistic about the summit as it used to be.
Experts say that even though the failed summit may well trigger another downtrend in the market of crude oil, it is going to be a short-term move. They say that the market is going to stabilize by the end of the trading week somewhere between $40-$43 per barrel.
