Price of oil is rising again, but this is not enough for producer countries. Quotation of 50 dollars per barrel is “not the best possible variant”.
“Nobody invited us,” says Anatoly Yanovsky, Russian Deputy Energy Minister, continuing to show indifference to OPEC summit in Vienna. Large players at the market of petroleum are again trying to rise; at the same time, after the summit in Doha, which was held in mid-April, representatives of the RF have stayed at home: Moscow has not even sent to Vienna even its technical observers. Less than two months ago the Russian leader was doing everything possible to bring Iran and Saudi Arabia to agreement; he was an intermediary between two rivals , which divide raw material market and the Middle East, and tried to convince them to freeze fuel production in order to stimulate rise price. Today, when the value of petroleum has risen from the minimal point to almost 50 dollars per barrel, the Russian Federation prefers waiting. “Oil price has gone up, which makes the question of freezing oil production lose its topicality,” said Aleksander Novak, Energy Minister of the RF.
Wait-and-see tactics or submission to terms of agreement seem to prevail in sentiment of oil giants. Analysts highlight that the reasons of rising oil price since January 27 are the following: fires in Canada, expectations of Khalid al-Falih to be appointed the new oil minister in Saudi Arabia, as well as rebels’ attacks in Nigeria. At the same time, experts ask themselves a question whether Khalid al-Falih will show more compromise approach to rivals. At the same time, there are rumors that PRC is storing millions of barrels of “black gold”.
The abovementioned reasons give birth to an idea that if certain amendments are adopted, a new epoch will start; however, the world still produces more petroleum, than it uses. The experts admit that 50 dollars is the worst possible price, as, on the one hand, oil price is not high enough to let economies dependent on oil recovery avoid crisis with all resulting geostrategic and political consequences; on the other hand – it is not low enough to urge producer countries of “black gold” to join forces for the general rescue and forget about contradictions.
Price Collapse “Almost Destroyed” Some Countries
Falah Alamri, Iran representative in OPEC, has admitted that some countries “have in fact been destroyed” by collapse of oil price. In Russia for the first time in 10 years sale of medicine has dropped by 10 percent, which means that people have started saving on what is vital.
At the same time, some representatives of OPEC have faced even worse situations. For example, Venezuela is on the verge of bankruptcy. Libya has gone into in chaos. There are civil wars in Nigeria. Iraq has become the stage of military actions. Together with Algeria, these countries are now called a “weak five” – five countries that are unable to stand in raw material race and have to reduce production of petroleum because of internal problems. Only Iraq has become an exception. Other countries have either preserved production at the same level or increased it, as, for example, Iran, which has targeted at conquering the markets that were lost during the years of sanctions measures. Venezuela , the Russian Federation, Iran, and Saudi Arabia need every petrodollar since their oil profit has dropped twice, together with price of petroleum.
In such situation everyone tries to save himself and even use such state of affairs to conquer new markets, especially owing to exit of the “weak five” from the market. Saudi Arabia is bound to reduce its public spending, but it hopes that the drop of oil price in tens of times will increase the sector of American shale, owing to which the United States could become independent from the countries of the Persian Gulf.
It is already signing contracts in Europe, for example, a recent contract with oil refinery in Poland, which is trying to free from oil dependence on the RF. The United States risk experiencing slowdown in shale sector, but i the country will no longer worry about Venezuela and Russia, which are worried about preserving their own political systems. At the same time, some analysts hope that smaller profits will urge Saudi Arabia to reconsider its programs, directed at financing the Orthodox Islam abroad.
It is worth mentioning that in order to maintain the living standard of 2014 the Russian Federation needs oil price to amount to 96 dollars per barrel, and Venezuela – 126 dollars. Saudi Arabia could have the same figures, but its population is not so numerous, the system does not require elections, and reserves, which have been accumulated for a long time, are more considerable. It should also be taken into consideration that Saudi Arabia has the lowest price of “black gold” recovery.
