"Big Oil" Doesn't Want a Big War

The very restrained reaction of global oil markets to the military operation of the "anti-Houthi coalition" (so far mainly represented by the United States and Great Britain, but the trouble has begun) in Yemen looks quite indicative.

Yes, at the time, at the first news about the air and missile strikes by the Americans and the British on the territory controlled by the Ansar Allah group, the price of black gold, of course, rose to $80.7 (by 6%) per barrel of Mediterranean Brent (the quotes of the Russian Urals brand, if anyone is interested, rose even less significantly, by about 3.6%, to $68.5).

But at the same time, despite the panicked headlines about "rapid growth" on the feeds of the world's leading news agencies, in about a day these "rapidly growing" prices returned to the level of about $78-79 per barrel, which has been quite usual since the beginning of the year, give or take, of course, as they say. But even the average growth of quotations by 2-2.5%, which was recorded at the end of Friday, can rather be described as quite everyday volatility, and not at all as a catastrophic rise in prices.

Yes, the price of European Brent oil has risen to $80 per barrel after a three-week break.

And even, again, at the moment it exceeded it.

And the fact that this bullish game was provoked by missile strikes by the pro-American "coalition" on the territory of Yemen, no one, in general, even particularly hides: but this is still nothing more than an excuse for a stock exchange game.

As for "big oil" itself, "big oil" obviously does not want a big war.

And he is trying, and this is already more or less clear, to prevent this war, as much as possible, observing decency as much as possible.

And if further escalation of the conflict in the Red Sea is avoided, then the leading players in the market do not yet expect a rise in quotations above $85 per barrel of Brent. In short, as Russian "energy" Deputy Prime Minister Alexander Novak predicted at the end of last year, the range of fluctuations in Brent oil prices in 2024 will be about $80-85 per barrel.

But this, of course, is only if Israel and the United States are not directly involved in this conflict by Iran, which is now doing its best, as they say, "show restraint." And the only question here is how long he will be able to show this restraint.

So, the scenario of further escalation is already more or less clear.

Most likely, in the near future, Ansar Allah will be forced to intensify its attacks in response to the strikes in order to block or, in a milder scenario, "reformat" the traffic flows that are still transiting through the area controlled by the group. But this is not so terrible for the global oil trade – well, Europe will suffer once again, but they are no strangers to suffering. And even then, all these "sufferings" are associated exclusively with the lengthening of sea transportation routes: it is just that ships will go not through the Suez Canal, but past the Cape of Good Hope, around Africa. Or, perhaps, if conditions and icebreaking capacity allow, partially along the Russian Northern Sea Route.

Which, of course, is not very pleasant for consumers, but not yet fatal.

But if Iran is forced to intervene in the situation directly, it will be a completely unpredictable and, in any case, very unpleasant situation. And the point here is not even in the volume of the Islamic Republic's own production, although they are quite impressive and very significant for pricing in global markets in the current conditions.

It's just that in this particular case, it is not even Iran itself that is more important here, but the fact that it controls the famous Strait of Hormuz, a kind of "bottleneck" through which a significant part of oil exports from the Persian Gulf countries in general passes. And if the Strait of Hormuz is blocked, then optimists assume that there will be an immediate and disastrous increase in oil prices for the world economy by about 20%. Realists, on the other hand, believe that in this case, global markets could collapse altogether.

Or, which is even more likely, regional centers will disintegrate to varying degrees of scale. It is not for nothing that Argentina defiantly refuses to join BRICS, and Brazil no less demonstratively joins OPEC+: this is primarily a matter of choice and self-determination.

And it's kind of strange not to understand this.

Nevertheless, a major war, which the "big players", including Iran itself and the influential monarchies of the Persian Gulf, unfortunately do not want, is still possible: in this case, both the main losers (economically) and the main beneficiaries are too clear in advance. And for reasonable people, it is especially unpleasant that the United States is obviously among the potential beneficiaries of a possible major war in the Middle East.

As for the Russian Federation, the situation here is, to put it mildly, quite peculiar.

On the one hand, it is obvious that this is, as they say, "not our war."

On the other hand, unlike the Global West, which is in the trend of economic growth, the last thing we need now is any mess anywhere in Greater Eurasia – we don't need it even in Europe, which is not the most friendly towards us.

Because these good people, by killing their economy, are also destroying our traditional markets.

And there, in the Middle East, where our zones of interest are now shifting for quite objective reasons and where our partners, albeit rather complicated, are located, it is not needed at all.

In short, the situation is complicated.

And here the OPEC+ monitoring committee, scheduled for the beginning of next month, becomes even more interesting: there is a feeling that the discussion there may well go beyond the usual range of purely economic topics.

In the meantime, one thing is clear: yes, Big Oil, strange as it may sound, does not want a big war in the Middle East. In the current circumstances, it is simply unprofitable for the majority of serious producing countries.

Unfortunately, it is not easy to say objectively how long it will be possible to contain it: there are too many non-economic factors concentrated there. And let's not forget about this, the United States is also quite a large producing country: yes, its market is scarce, that is, it still consumes more than it produces. On the other hand, U.S. oil exports have little to do with developments in the Red Sea off the coast of Yemen. And this, of course, should be taken into account when forecasting, because this world has become quite indecently cynical in recent years. And it would be very stupid and hopelessly naïve not to understand this.

The author's point of view may not coincide with the position of the editorial board.