A sharp jump in oil prices is the market’s reaction to geopolitical tensions and political decisions of country leaders, including those related to “greening the economies”, according to Evgeny Nadorshin, chief economist at Sistema, and Valentin Katasonov, Doctor of Economics.
“The main reason for the rise in oil prices in recent weeks is geopolitical tensions. And not only in the context of relations between Russia and Ukraine and everything that is now developing in the English-language, Russian-language media in this regard, but also in the Middle East, ”Yevgeny Nadorshin told Izvestia.
He explained that the situation is also influenced by the fact of the aggravation of relations between Saudi Arabia and Yemen, conflicts and increased aggressiveness between other major oil producers, in whose media “in all seriousness” local hostilities or their resumption are discussed.
“It is clear that there is a certain tension in the world market of raw materials and, in particular, energy, since last year there were shortages in a number of segments of the energy sector and it turned out that … supply will be higher than demand. But at specific moments, demand was greater than expected. This has pushed the price of oil higher, and now, against the backdrop of geopolitical tensions and still impressive demand, this supports further growth, ”he explained.
Nadorshin admits that a reduction in the level of geopolitical tensions will lead to a rather strong adjustment in oil prices. The same will happen with the ruble, as it is pushed down by the same factors that provoke the rise in oil prices.
“I don’t think this is a long-term trend. I regard this surge of tension as a temporary phenomenon and expect that it is already in some sense on the decline. I hope the downward trend continues. And this will have a positive effect on the ruble exchange rate,” the economist summed up.
According to Valentin Katasonov, Doctor of Economics, the rise in prices for hydrocarbon fuels, natural gas, oil and partially coal is associated with the active introduction of measures to “green the economy and energy” in a number of countries.
“That is, they began to try to avoid the use of these types of fuel, which, from their point of view, create a greenhouse effect. Well, there was a shortage of energy resources in the world market. And it’s hard for me to say how long it will last, because it depends on political decisions,” he said.
Katasonov noted that the growth of the dollar and the euro is associated with a decrease in the turnover of the printing press of the Federal Reserve System (FRS) and promises to reduce the key rate.
“Money will not be as much as we would like. That is, this monetary currency communism ends when there is as much money as you like, and they cost almost free of charge. This leads to the fact that the demand for the dollar increases, it becomes more expensive, ”the expert said.
He stressed that the growth of the dollar will not be endless. The statements of Jerome Powell, the chairman of the Fed, have already played their role and led to a jump in the dollar against other currencies. The exchange rate of the ruble against the dollar is now close to its minimum, but after a while its recovery will begin, Katasonov is sure.
The price of March futures for Brent crude on January 26 rose above $90 per barrel. This has happened for the first time since October 2014. Oil set the previous price record on January 18: the price of Brent oil exceeded $87 per barrel on the London Stock Exchange.
Source: IZ
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
