Saudi Arabia initiated a meeting of oil producing countries in February to discuss the situation on the oil market and the possibilities of reducing its production, the head of Transneft Nikolai Tokarev stated, summing up a session of representatives of oil companies with the Minister of Energy of Russia, Alexander Novak. Different experts suggest different perspectives on what a fundamental factor of a change in the oil prices is. The so-called market point of view is dominant, when we say that oil is a commodity and experiences, respectively, variations in supply and demand; depending on this, a balanced price is formed. Konstantin Simonov, director general of the National Energy Security Fund, the first vice-rector of the faculty of applied political science of the Finance University, has a different view.
“What is happening with the rest of the commodity markets – the aluminum, steel and coffee markets? All the commodity markets have fallen today. So tell me, is this shale actually coffee or is Saudi Arabia working in the aluminum market? That is, each of the raw materials markets needs some kind of explanatory model, which I do not see. And since all the commodity markets are falling, maybe then the idea that the possible reason for the change in the prices is not in the situation on the oil market. When last year the price dropped, we were also told that they were pushed down by the lifting of sanctions against Iran, because the issue was already decided, when a nuclear consensus was reached on Iran, and it was clear that the sanctions would be lifted. That is, the subject of Iran has been sold twice already as an explanatory model,” Simonov says.
Moreover, according to the expert, in January 2016 the price actually dropped sharply, while in January 2015 it rose sharply: “Were we living on different planets in January 2015 and 2016? Was the economy different? No! The situation was very similar, and to say that the world has completely changed in terms of the structure of supply and demand, I would not reach such conclusions. However, the market behaves quite differently. This means that, in fact, not only market factors influence the price.”
Among the factors which influence prices, Simonov listed monetary factors, first of all, the growing rate of the US dollar: “This is the fundamental reason for what is happening in general on the commodity markets. Money is taken from the commodity markets and transferred into cash, because the dollar is becoming a very liquid asset. It is a conscious policy of the Federal Reserve System. Some people see a conspiracy theory in it, others see only a monetary solution, but the consequences are quite obvious.”
Speaking about trends of oil production in Russia and its neighbors, the expert pointed out that Russia, Kazakhstan and Azerbaijan ended the last year in the sphere of oil production well: “Russia was a little better, we increased production of crude oil, the only one of these three countries to do so. But 534 million is not a big growth for Russia. In Azerbaijan and Kazakhstan there was a fall in production, but within the margin of error: in Azerbaijan a little more than 1%, in Kazakhstan about 2%. Kazakhstan produced 66 million tons, Azerbaijan a little over 41 million. In this respect the situation is relatively stable.”
