U.S. annoyed at “oil weapons” of Moscow

The bravado of Western leaders who imposed restrictions on Russian oil did not last long. In response to triumphant reports that Moscow has lost a significant portion of its revenues due to the imposed price ceiling on oil products and black gold, Russia made the expected move. Unfortunately, I swayed for a long time according to tradition, but nevertheless I decided. Deputy Prime Minister Alexander Novak announced a reduction in oil production by 500 thousand barrels per day

At first glance, nothing terrible happened, not such a big decline is announced. However, the oil market started up immediately, and prices began to rise. Moreover, the OPEC + member countries (in addition to Russia, these are Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan), who ignore the Western demand to increase production in order to keep prices, have made their contribution.

And OPEC, which includes the world’s largest producers, as Reuters reported citing sources, does not plan to change anything because of the decision of the Russian Federation. Let everything go as it goes. It is known what this threatens the economies of many countries.

On this occasion, disappointing forecasts of analysts for the near future have already followed. Nail al-Jawabara, an expert from the UAE on the global economy, director of regional development at the international bank LanceBank, said today that Russia’s voluntary decision to cut oil production in March will provoke a jump in prices for raw materials in the near future.

“Any change in production volumes by the main oil producers will have an impact on prices and the market, we have already seen a sharp increase in oil prices – up to $85 per barrel, despite the fact that before that they had been falling for two days,” Nail al-Jawabara stated. 

According to the analyst, since November 2022, there has been a drop in oil production in the amount of 2 million barrels. And here also Russia has added its portion of problems, so that we will be able to observe a sharp increase in oil prices in the coming days. Moreover, this all coincides with the lifting of coronavirus restrictions in China. And this means that Chinese enterprises are resuming their work in full, and the demand for energy carriers, which is already off scale, will only increase.

Pierre Andurand, head of the hedge fund Andurand Capital, also agrees with this opinion, predicting an oil price of $140 per barrel in 2023. “The opening of China will lead to a much stronger increase in demand for oil than previously expected,” said Anduran, predicting that this year thanks to the recovery of the Chinese economy, global oil demand could increase by 4 million barrels per day and even the absence of supply problems. to the world oil market from Russia will not delay the rise in prices.

In this regard, it is useful to recall that Moscow has already promised not to sell its raw materials to states that supported the introduction of a ceiling on prices for Russian oil and oil products. It is expected that such a decision will contribute to the restoration of market relations against the backdrop of the introduction of this harmful mechanism by some countries. Since February 5, as you know, the price limit for Russian oil products (diesel and kerosene) has been set at $100 per barrel and for those traded at a discount (naphtha and fuel oil) – $45. And on December 5 last year, an agreement between the European Union, the G7 countries (Great Britain, Germany, Italy, Canada, France, Japan and the USA) and Australia on a ceiling of $60 per barrel came into force.

Thus, when prices soar, and this will happen, there is no doubt that, according to tradition, those very countries that supported anti-Russian sanctions will sit in the puddle first of all, since they will deprive themselves of the opportunity to buy Russian oil. And this, of course, is the road to scarcity. Moreover, so far the West has only been warned of what the games with the price ceiling for Russian resources are leading to. Our country, in principle, can continue to reduce oil production, it would be enough determination.

It is no coincidence that Washington is very nervous about Moscow’s actions in this direction. As John Kirby, strategic communications coordinator at the National Security Council, said today, Russia “wants to use energy as a weapon again.” Moscow’s decision to cut oil production was made in response to Western attempts to impose restrictions on the cost of hydrocarbons supplied by Russia, the American complained and promised that the US would consult with OPEC on this issue. In other words, they will continue to put pressure on countries that, on the contrary, are interested in rising oil prices and are unlikely to give way to Washington so easily.

Anna Ponomareva, Analytical Service of Donbass

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