Russia (bbabo.net), - Since the beginning of the year, Brent oil prices have risen by almost 17% to $89 per barrel. This happened as if in defiance of the forecasts of the world's largest agencies, expecting a decline in quotations. At the upcoming OPEC+ meeting on February 2, the members of the alliance will have to decide whether they want to cool the market and bring down prices or follow the previously adopted plan.

Oil prices are rising not only because supply has not kept pace with demand, as the impact on the market of the Omicron strain was not as strong as it was expected at the end of last year. The aggravation of relations between the Russian Federation and the United States raised fears that there may be problems with the supply of Russian sour oil, some of which is already in short supply on the market. The situation in the Middle East also contributed to the growth of quotations, namely, the activation of Yemeni rebels, including their attacks on oil facilities in the UAE.

In addition, the market was affected by the information that the OPEC + countries do not have time to increase production at the planned pace. In December 2021, instead of the planned 400 thousand barrels per day, production growth amounted to only 260 thousand barrels, and in January, according to Reuters, only by 210 thousand. Many attribute this to the lack of investment in new oil projects in recent years due to the active promotion of the green agenda.

Dmitry Skryabin, portfolio manager at Alfa Capital, noted that it is highly likely that the parameters of the deal will be preserved in March (an increase of 400,000 barrels per day). The high price of oil is beneficial for exporting countries, and the question of losing market share is not yet on the table. And judging by the latest data, a number of OPEC countries no longer choose their production growth quota, and in such conditions it hardly makes sense to increase it even more, the expert emphasizes.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, agrees. According to him, the market is now more interested in how much the participants in the deal will actually increase production in March, rather than the declared goals of the alliance.

This means that in February oil prices will remain at today's high level, and possibly rise higher. For Russia, this scenario has twofold consequences. On the one hand, the National Wealth Fund (NWF) will receive additional revenues from oil exports, and the budget - from the taxes of oil companies. On the other hand, pressure from below on prices for gasoline and diesel fuel in Russia will increase, which will provoke their growth first in wholesale and then in retail. Aviation kerosene will also rise in price, which may lead to an increase in airfare. A particularly critical increase in prices on the domestic fuel market may occur if oil prices exceed $100 per barrel.

Oil reserves in major countries are already close to multi-year lows, says Skryabin. A situation may arise that the current oil shortage (3 million barrels per day) will not be covered by an increase in production from OPEC +, but will also increase due to increased demand, the expert believes.

According to Hansen, most likely oil prices will exceed $100 only in the second half of 2022. But the decline in oil prices in the near future may provoke several factors. First, the lifting of US sanctions on Iran's oil and gas exports. Secondly, the growth of shale oil production in the United States. Thirdly, a sharp drop in gas prices, which will reduce the demand for oil as its substitute. Fourth, the emergence of a new dangerous strain of coronavirus. But it is also impossible to exclude the rapid growth of barrel quotes in February, if none of these factors work, the expert clarifies.

bbabo.Net