Analyst: Brent in August, will cost $40-45, and the market looks in the future

the Oil benchmark North sea Brent in August will be traded in the corridor of $40-45, and the market is already “looking into the future.” This opinion was expressed by the “Rosbalt” the head of IAC “Alpari” Alexander Razuvaev.

He believes that “the situation on the market of “black gold” in August will continue to be soft policy of the world’s leading Central Banks, risk, Turkey, Iran and wider middle East geopolitics, as well as weak demand from the world economy.”

“Since the beginning of the year, the fed (the us Central Bank — ed.), the ECB, the Bank of Japan and Bank of England pumped into the markets $5 trillion. However, weak demand is the main fundamental risk. According to OPEC, the oil market will return to previous levels of demand in the end of 2021. Assessment of the cartel, this year the world will need 9 million barrels a day less oil than in the past, and the next demand will remain at 2 million barrels a day lower than before the crisis”, — stated in the review of the expert.

At the same time, he said, “the oil market also looks to the future.” “The candidate from Democrats Joe Biden (to date) almost 15% ahead in the race (for President US incumbent President) Donald trump. He aims to return to the United States in the “nuclear agreement” with Iran in the future to remove Tehran with economic sanctions. The deal which unfroze Iranian foreign exchange reserves, and opened the Iranian oil way on the world market, according to Biden, should be “to expand and strengthen through diplomacy and allies”, and that is the surest way to “stop destabilizing activity” of the Islamic Republic. It is very likely that if he wins the November elections, Biden will soften or cancel sanctions against Iran. The result is up to two million barrels per day of new oil supplies can get into the market,” says RazuvaevV.

He predicts that “in August, Brent will be traded in the corridor of $40-45”. “(Russian export brand) Urals is likely to be cheaper than Brent. The price of Urals will affect the growth of its shipments in August, more than 40% due to the increase of oil production in Russia in the framework of a new phase of agreements OPEC+. Plus the low demand for Russian oil mixture in the North-West of the EU in connection with large reserves of raw materials in storage. Urals, of course, is because the proportion of heavy sour Bashkir and Tatar oil, inferior in quality to Brent and standard in the past, the discount is fair. But this is not so important for Russia”, — says the analyst.

In his view, “the main thing is the balance of supply and demand”, which is linked to the risk of the “second wave of the pandemic”. She may be “very painful” for the economy of Russia, concludes the expert.

we also Recall that since the beginning of this year on the global oil market rode several waves of falling prices for “black gold”. A negative situation was caused by a whole complex of factors: a General overproduction of raw materials, a sharp drop in demand due to the rapid spread of coronavirus infection COVID-19 (March 11, was declared a pandemic) and concerns about its impact on the global economy and the collapse of the deal, OPEC+ (officially from April 1, but in fact, after fruitless negotiations of the countries-oil producers at a meeting on March 6 in Vienna).

on April 12 OPEC+ agreed on a new deal, joined by 23 States. The agreement will be valid for two years, from may 1, 2020 to may 1, 2022-th. In may—June this year, the production cuts will amount to 9.7 million barrels per day (from October 2018), then — until the end of 2020 — 8 million barrels, and 6 million by the end of April 2022. New business OPEC+ withTala forced reaction of oil producing countries on the situation in the market and pressure from the United States. Overall, however, it is not blocked volumes decline in global demand, besides on the market have accumulated huge reserves of raw materials.

At the meeting on June 6, the member countries of OPEC+ extended on a month — until the end of July — the period of validity of the agreement to reduce oil production to 9.7 million barrels per day.

15 July, the meeting of the Ministerial monitoring Committee (JMMC), which is composed of representatives of the countries participating in the agreement OPEC+ coordinated easing from August 1, restrictions on oil production (about 2 million barrels per day) — mined before the imposition of restrictions on the volume will be reduced not by 9.7 million, only 7.7 million barrels per day.