BAKU, Azerbaijan, May 24. From a macro and geostrategic point of view, Iran is the logical hope for future oil supplies to counter any reduction from Russia, Sam Barden, Director of SBI Markets, an international commodity trading and advisory company, told Trend.
“I think short term uncertainty will keep oil prices at current levels, but I don’t see them increasing. Russia has plenty of oil to sell and is actively selling it, in some cases at considerable discounts. The only thing that could send oil prices higher would be if there is a hold up on the JCPOA with Iran, and the potential for future Iranian oil entering the international markets is held up. I believe what has happened in Russia and Ukraine, underpins the need to open Iran’s markets to international trade and remove sanctions, whose effects are questionable at best,” he said.
Regarding OPEC+ performance in keeping the market balance, Barden noted that there has long been a disconnect from what OPEC says and what OPEC does.
“It is not so easy just to increase and decrease production to suit the news narrative. OPEC plus should be more worried about the USA NOPEC bill than anything else,” the expert explained.
Barden believes that Russian oil embargo is not likely unless there is a miracle replacement for their exports in the form of new energy.
“Europe could try to ban Russian energy, but there would be widespread social unrest as economies collapsed, manufacturing came to a halt and people froze during the winter. The other thing to note, is highly populated nations such as China and India seem unlikely to ever reduce their dependence on Russian energy, for the very reasons listed which lead to social unrest.
Europe will be able to substitute Russian supplies nowhere in the near term. In the long term, perhaps Qatar for limited supplies, and Iran if they JCPOA is signed and massive foreign investment entered Iran and developed their oil fields. This would take some time. For the record, I believe this is the correct approach and should happen anyway. The other option is to increase nuclear power again. Renewable energy whilst populist, is not going to replace current energy, even in the most optimistic of fairytales. There are all sorts of issues in supply chains for battery minerals and solar panels that will take decades to resolve,” the expert concluded.
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