Why over price war in the oil market

Oil-producing countries at the same time demonstrate amazing unity and harmony in seeking to balance supply and demand in the oil market, not succumb to various provocations and distractions. Thus, in contrast to the rumors about the continuation of squeezing the Russian oil on the world markets, Russia and Saudi Arabia are in close contact and try to assure the world market in the absence of differences.

recently held a telephone conversation of the head of the Ministry of energy Alexander Novak with Saudi counterpart Prince Abdulaziz bin Salman. In it, the Ministers once again reiterated their commitment to strict compliance with the terms of the new deal OPEC+ and the need for constant monitoring of the world market of “black gold”.

a Short price war “against all” launched in March by former partners of Russia on OPEC+ ended with a collapse of quotations of a barrel to multi-year lows and clearly demonstrated how fragile the balance in the oil market. The victims were all parties. Moreover, more countries are the instigators, developing production, announced huge discounts to buyers on falling of quotations and tatarivka the eyeballs all your tanks. On a new deal had to negotiate in an emergency mode, leaving even thought about fighting until better times.

“the Conclusion of a new deal between oil producers means the completion of a price war, but does not mean the end of price competition. The distinction between these two concepts is rather thin”, – said the head of the research Department on fuel and energy complex and housing and communal services of the Analytical center under the government of the Russian Federation Alexander Kurdin.

Limitation of production implies that the producers will refrain from large-scale redistribution of the market. But market mechanisms – among them one of the most important is price competition – will not disappear. “That’s why we can’t expect a serious rise in prices not only in the second quarter, but probably before the end of the year,” – said the expert.

Now the parties are actively demonstrate mutual support and the negative media coverage that occurred in March, still has an impact on the market. For example, information about deferment of payments for oil in Asia and Europe Saudi state company Saudi Aramco had to officially deny in Express mode, to once again not to push the price to decline.

“the Positive information background is now quite important – as long as there remains high uncertainty not only due to the pandemic, but because of the uncertainty of the economic strategies of States – investors want positive signals, giving ground”, – said Alexander Kurdin.