Hydrocarbon scenarios: the Ministry of Energy expects oil prices to return to $ 45–55 per barrel

World oil prices will return to the range of $ 45-50 per barrel in the second half of 2020. This opinion was expressed by the Deputy Minister of Energy of the Russian Federation Pavel Sorokin. At the same time, the level of $ 45-55 is forecasted in 2021, "if there are no force majeure events."

According to him, the Russian Ministry of Energy modeled all possible scenarios for the development of events, including the one that eventually happened.

“All the scenarios were calculated, the conclusion is very simple: if they involve the extension of cutting (oil production. - RT ), then sooner or later we would still have fallen in price to $ 40 and below - whether with an exit in six months, with an exit through year and so on, ”Reuters quoted him as saying.

He noted that the level of equilibrium prices is in the range of $ 45-55 per barrel, this is a fair range that allows you to invest in projects and provide replenishment of production.

“The market is cyclical, there will be drops lower and higher growth, which will be regulated by switching on and off producers with high margins and quick reactions - like oil shale,” the RF Deputy Minister of Energy added.

Recall, on March 9, oil quotes were marked as the strongest since 1991 decline per day. At the peak of the fall, Brent crude was worth $ 31 per barrel, WTI - $ 28 per barrel. At the moment, prices are at $ 34 and $ 31, respectively.

In turn, US President Donald Trump called Moscow, Riyadh and the “fake news” guilty of a market crash. According to Politico, the head of Bely allegedly discussed the decline in energy costs with Russian officials who are not named after Russian President Vladimir Putin, as well as with Crown Prince of Saudi Arabia Mohammed bin Salman Al Saud. At the same time, the press service of the American administration refused to confirm this information.

The collapse occurred after the two-day negotiations on the OPEC + deal ended in Vienna on March 6, following which the participants could not agree to extend the deal to reduce oil production. Under the terms of the current agreement, which expires on March 31, OPEC + participants, including Russia, reduce production of raw materials by 1.7 million barrels per day compared to the level of October 2018.

After that, Saudi Arabia announced an increase in production and the provision of discounts to buyers of raw materials from the United States, Northern Europe and Asia. According to Bloomberg, Iraq, Bahrain and the UAE also intend to reduce the cost of their products.

At the same time, Forbes magazine in one of its articles expressed the opinion that Moscow will win in the oil price war declared by Riyadh. The reasons for this, in particular, are the experience and ability of Russian President Vladimir Putin and the head of the Ministry of Energy Alexander Novak to make complex decisions on oil, which, according to the publication, cannot be said about the Saudi leadership. In addition, according to the author of the material, the Russian Federation has the opportunity to survive in this situation, while Saudi Arabia has a number of reasons to surrender earlier and push OPEC to stabilize the market.

The effect of coronavirus

At the same time, Sorokin did not rule out that in 2020 the global increase in demand for raw materials could be zero due to the spread of coronavirus infection COVID-19, whereas earlier experts had predicted it at almost 1 million barrels per day.

Recall, on the eve of the World Health Organization (WHO) announced that the outbreak of a new coronavirus in the world has become a pandemic.

“It all depends on how strong the psychological effect and the scale of the measures will be taken,” he added.

Earlier, the International Energy Agency in its report predicted a drop in global oil demand due to infection by 90 thousand barrels per day. According to the organization’s experts, energy consumption will be reduced for the first time since 2009.

March 18 should be a meeting of the technical committee of OPEC +. According to the Minister of Energy of Kazakhstan Nurlan Nogaev, because of the coronavirus, its format will be in the form of a conference call.

“According to the OPEC + technical committee, there was a preliminary agreement on March 18th. Today it is planned, the holding is being considered. But at the same time, it is planned to conduct in selector mode via telecommunication in order to avoid infection and in the light of the events that occur, ”the Kazakh Minister quoted TASS.