What already now, after a seemingly comparatively short period of time has passed, it has become absolutely clear: oil prices would still have started their rally, even if the parties had not been suspended (some use the much tougher word “collapsed”) OPEC + .

The causes of what is happening are much deeper, and they, as a rule, are rather difficult to find in situations of this kind, but not in this particular case. When the cause of turbulence in the oil markets is clearly the global systemic economic crisis itself, which, in turn, was triggered by the “Chinese coronavirus”, whatever that concept might be.

We emphasize: only a trigger, no more.

Just recall how events developed in the energy markets: initially, oil quotes and exchange rates collapsed after the news that OPEC + participants were unable to extend oil production agreements: Moscow offered to preserve the existing conditions, and Riyadh wanted to add reduce production by another one and a half million barrels per day.

Moscow did not agree to this additional decline in production, which was quite natural: in recent decades, Russia learned to count money no worse than these magicians, and therefore it was well understood that it is now vital for Riyadh and Washington to reduce production, and far from proudly towering among the sad spring plains of the ancient capital of Russia.

Because oil prices will go even lower for a while, simply because Chinese markets are still recovering, while consumption in the rest of the world, especially in Europe, will now fall in some way.

So the price gain for Russia from a further reduction in production under the OPEC + transaction would be very illusory. But from the markets, it was so white-stone and beautiful, if she, Moscow, continued to engage in all kinds of stupid things, they would have squeezed out, or even thrown out in honor of some other “fight against human rights”. Moreover, they would have done it very brazenly and decisively, because the US will only continue to grow in production not controlled by any “deals” similar to OPEC +. And her, this oil extracted in America, someone will have to, you know, buy.

Because it is democratic and carries the "molecules of freedom." That's just to sell it at an adequate labor cost. Problem.

And why should Russia in this case solve other people's problems for free - isn’t it enough? In short, with a reduction in production, the most natural failure came from the Russian side ...

Here, as a result of their own unconvincing in the negotiation process, the Arabs, as usual with them, and freaked out. And now, from April 1, the OPEC + deal will cease to exist and there will no longer be any restrictions on the alliance members.

We will figure out who won from this and who lost.

And here we have to admit: in the short run, we lost, in general, everything.

Well, maybe, in addition to the largest importers like China, which is now slowly recovering from the experienced Wuhan crisis, and now oil prices have fallen sharply and on time - this is very good.

Well, if everyone is feeling bad, then consent is a product of non-resistance of the parties. So, producers will inevitably raise energy prices, and the only question here is - for whose, sorry, expense. And here a slightly different mathematics is already beginning, including non-economic methods of coercion.

Because, apparently, it turns out due to the one who is most bent. So here, perhaps without preliminary caresses.

And so, no matter how strange it sounds, Riyadh has the most vulnerable position: no, not at the cost of production, then everything is in order, a little less than $ 2.5 per barrel (although, judging by the recent An interesting interview with Igor Sechin, Yevgeny Primakov, Jr., Rosneft does not lose much here either: $ 3.1 per barrel on OSes is a very decent figure, quite competitive to the Saudis). And purely politically - it’s not easy for the medieval kingdom, even with such a low cost of oil extracted in its desert, to win at least something from the modern great powers.

And specifically: we all understand how critically the Saudi dynasty in its current form depends on its “partners” in the United States (the masses of the examples depend on the “murdered” but by no means forgotten murder of journalist Jamal Khashukji, then everywhere: even the mechanism is “right” person "include" partners "just at any time).

And therefore we do not at all exclude the possibility that this whole somewhat wild story with “an additional reduction in production within OPEC +” (c) was nothing more than an initiative attempt by the Saudis to “spread the costs” of pressure from US partners, including on their shoulders Russian Federation.

There is nothing new here.

This is if we talk about "political addictions."

Well, as for the “economic dependencies”, here, in addition to Riyadh, in which Saudi Aramco’s income is actually the kingdom’s income, and you can’t remove countless hordes of princes and other sheikhs from the budget (therefore, the CA’s budget is balanced as deficient only when $ 86-87 per barrel), a very unpleasant situation is developing for Washington, which we will not dwell on with your permission now.

For talking about the cost of shale mining in America is now commonplace and even a little bad taste: everything is so clear, especially in connection with the number of Americans who somehow use their personal funds to play in the stock and investment markets, that is really a little boring speak. The oil industry is joking now, but this is 5.6% of the US GDP, this is about 835 thousand jobs (plus about 120 thousand “related workers” on the pipelines). And, if anything, to bang this industry only because somewhere on the Arabian Peninsula some medieval sheikhs want to live in the "oil paradise", no one, sorry, will not. There are minor political problems with the Russians in this sense: the atomic bomb and hypersonic weapons, for example.

There are no such problems with the Arabs.

However, here we are again returning to “political dependencies”. And this topic we recently passed.

Thus, when all the same Igor Ivanovich Sechin in the interview we already mentioned above says that he expects the price to be $ 60 per barrel by the end of the year, he is not at all favored, but gives a completely objective and even possibly conservative forecast. The situation is simple, in general, to amazement: as Bloomberg reported over the weekend, oil companies have already reduced investment budgets by $ 31 billion due to lower oil prices. And the first, which is quite natural, it was the companies of the United States and Canada that started to cut their budgets, which even without the decline in oil prices against the background of the OPEC + transaction, which was very favorable for them, to put it mildly, "experienced minor difficulties."

And these are only the first weeks. If you do nothing, it will be even more fun.

Therefore, it’s just what I’ll call the full-fledged crisis in the global oil industry, I’ll probably call it something to worry about: it’s just a long-term volatility, calculated and predicted not only by the head of Rosneft. Volatility is unpleasant, but transparent, which is known approximately to what results will lead after the mandatory (here who would argue with Igor Ivanovich) “market adjustments”. That is, the situation here is extremely simple: we just don’t want to pay the bills of others, these are not our games, we are eliminating ourselves, please decide without us.

There is no doubt: they will decide.

As they said in the famous post-Soviet comedy about a cow flying in a bomber, you want to live - you still don't get upset. And we have no doubt that the American oil producing and refining industries, and the Kingdom of Saudi Arabia as a whole, with all their sheikhs and princes, love life and value it in all its manifestations. And that's why just this volatility, even though it looks somewhat frightening now, is quite controllable, the mechanisms are known by analogy with the same OPEC +.

The trouble may not come from there.

I’m afraid that what is happening on the world stock markets, on the stock markets that are naturally peddling, even in the sense of controllability of processes for the oil markets, looks much worse.

The author’s point of view may not coincide with the position of the publisher.