BAKU, Azerbaijan, April 30. Crude oil prices are expected to remain high this year due to lower Russian exports, Trend reports with reference to the UK-based Capital Economics research and consulting company.
“Even so, prices should gradually fall back owing to increasing non-Russian supply, mostly from OPEC and North America, and slowing demand growth. What’s more, although volatility will remain very high whilst uncertainty over Russian supply lingers, it should be partially contained by OECD country plans to draw down strategic oil reserves.
Looking at ship tracking data, Russia’s seaborne crude oil exports fell sharply shortly after the breakout of war in Ukraine in March, probably because of the increased complexity of trading with Russia, but they have recovered since. In the coming weeks, we suspect Russia’s export volumes will fall again as Western countries work to reduce their reliance on Russian energy. We currently assume that Russia’s exports will fall by about 1-1.5m bpd, compared to before the war, in the second half of the year. Of course, exports could fall faster if the EU and/or other Western countries rachet up sanctions,” the company said in its report.
Despite the war in Ukraine and the ensuing uncertainty over Russian supply, OPEC has been reluctant to accelerate its planned reversal of pandemic-related supply cuts; perhaps because it can’t, says Capital Economics.
“OPEC has been struggling to raise production in line with its current plan for a while. In a nod to tightening supply, OECD countries have announced that a total of 240m barrels of oil will be released from strategic reserves over the next six months. These releases will take the pressure off falling commercial stocks and should therefore help contain price volatility,” the report reads.
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