The oil price must "let me go" again?

Text/Su Jiachun

In the second half of the international oil prices, the risk of ups and downs of 100 US dollars/barrels may be maintained.

Since the beginning of 2022, international oil prices have been moving along the way. In the first half of the year, the average price of Brent crude oil futures was $ 104.94/barrel, and several times exceeded $ 120/barrel. Geopolical risks, new crown epidemic and Fed's monetary policy dominate the trend of international crude oil prices. From early January to the end of June, Brent crude oil futures prices increased by 44%, with a monthly compound growth rate of 6.5%.

The research and analysis believes that the average price of Brent in the second half of the year will remain at a high of 100 US dollars per barrel, and it will rise in the third quarter, and then the shock will fall down. The average price of Brent in the third quarter may be slightly higher than in the second quarter, about $ 110 ~ 120/barrel; the average price of Brent in the fourth quarter decreased, about 90 to 100 US dollars/barrel; 100 ~ 110 US dollars/barrel. In addition, the possibility of surge in oil prices in the second half of the year. If the G7 implements a price limit order on Russia's oil, Russia retaliates by reducing production, or the price of oil prices will rise to more than $ 150/barrel; if the global economic outlook continues to deteriorate, the financial market is high, or it will cause oil prices to fall to less than $ 90/barrel. Essence

Factors to support oil prices to maintain high

The growth of liquid fuel demand has accelerated, and China is the main driving force for growth. It is expected that the global liquid fuel demand will increase by about 1.5 million barrels per day over the first half of the year. Among them, China demand increased by about 0.7 million barrels per day when the epidemic was controlled. The United States and the Middle East each increased by 0.2 million barrels/day; Europe and India was basically flat due to high inflation. Global liquid fuel demand is expected to return to the level before the epidemic, about 1 million barrels per day.

The Ukrainian crisis exacerbates market turmoil and western sanctions have reduced Russian supply. In the first quarter of 2022, Russian oil production was 11.3 million barrels per day. Western sanctions reduced the output in the second quarter by about 0.8 million barrels per day. It is expected that by the end of the year, it will decrease by 1.2 million barrels/day to 10.1 million barrels/day. G7 is discussing the price limit to Russia's export of oil to about 45 US dollars per barrel by controlling shipping insurance. As European and other Western countries have controlled 90 % of the worldwide shipping insurance, the market expects that this sanctions will be more severe than that of the European Union's embargo Russia. If sanctions are on the ground, Russia is likely to reduce output by 20%to 30%, and then oil prices will skyrocket.

OPEC+is weak with the United States, and the market supply is tight. The implementation rate of OPEC+output targets fell monthly, and the current crude oil output is 2.7 million barrels per day less than the target output. OPEC+plans to end the production reduction agreement in August 1 month in advance, and its subsequent resolutions have uncertainty. OPEC+currently crude oil idle capacity is about 3.77 million barrels per day, less than half of the average level in 2021, and its influence on the global oil market has weakened significantly. In the second half of the year, Russia reduced production due to sanctions. Iran and Venezuela were difficult to terminate sanctions. Some member states might reduce production due to social turmoil caused by high inflation and grain crisis. It is expected that production growth is limited. The increase in production in the United States is less than expected. In the first half of the year, only about 0.3 million barrels per day increased. In the second half of the year, it may be reduced by hurricanes and reduced production (the output of 0.2 million barrels per day caused by hurricanes in the same period last year). EIA predicts that the US output of crude oil in 2022 is about 11.92 million barrels per day, a year -on -year increase of 0.79 million barrels per day, and below the level of 12.29 million barrels per day in 2019.

Global oil inventory is at a historical low, and it is difficult to reverse the consumption. The OECD national commercial oil inventory and strategic crude oil inventory were 2.6693 billion barrels and 1110.1 billion barrels, respectively, which has fallen to the lowest level in nearly two decades. The US commercial oil inventory was 1.18064 billion barrels, the lowest level in the past five years; strategic crude oil reserves were 4978.7 million barrels, which can only be used for 25 days for the United States. It has been less than 500 million barrels since 1985.

Factors that lead to the decline in oil prices

The global economic prospects have deteriorated significantly, and the risk of economic recession has increased. The Ukrainian crisis has exacerbated the impact on the global supply chain, which led to rising commodity prices and surge in global inflation. The current world economy is facing severe challenges. Food, energy, debt crisis. The IMF expects that the global GDP growth rate in 2022 is 3.6%, and the growth rate of US GDP growth is 3.7%, which is 0.8 percentage points by 0.8 percentage points from the forecast value at the beginning of the year. The US probability will be gently declined from the fourth quarter and drag down the global economy.

Mutative new crown pneumonia virus has been widely spread, and uncertainty prevention and control has increased. The virus is evolving towards the direction of against the vaccine, bringing great uncertainty to the development of the epidemic. Looking forward to the second half of the year, Omikon mutant BA.5 and other mutant viruses are likely to cause multiple rounds of global epidemic in autumn and winter. At present, many countries and regions have all canceled the prevention and control measures of the epidemic, but it does not rule out the possibility of restarting due to the intensification of the epidemic. In order to ensure the safety of the people's lives and the stable operation of the economy, China has implemented the prevention and control strategy of precise prevention and control and dynamic clearance; with the continuous enhancement of the transmission of mutant strains of the new crown virus, subsequent domestic epidemic prevention and control missions are very arduous.

Europe and the United States accelerate the tightening of monetary policy and suppress international oil prices. In the first half of the year, the Federal Reserve raised interest rates 150 basis points within four months and began to shrink from June. It is expected to raise interest rates in the second half of the year. The European Central Bank is expected to raise interest rates from July, and it is expected that the interest rate hike will not exceed 140 basis points. With the radical interest rate hikes in Europe and the United States, the financial market has caused a panic in the financial market for hard landing, and the bulls may make a profit settlement and escape at a high level before the end of the year, resulting in a plunge in international oil prices. Related policy recommendations

Strengthen the analysis and judgment of international oil prices, and introduce regulatory measures in a timely manner. Recently, due to comprehensive factors, international oil prices fluctuated sharply at high levels, which has adversely affected my country's energy security and economic development. It is recommended to coordinate the forces of all parties, strengthen the analysis of the trend of oil prices, introduce relevant industrial regulatory measures in a timely manner, and effectively prevent the adverse effects of large oil prices in the future on the development of domestic economic development. Essence

Accelerate the construction of petroleum reserves and deepen the "Belt and Road" international energy cooperation. At present, there is still a large gap between the scale of my country's oil reserve 90 days from the 90 -day standard. It is recommended that relevant national competent departments strengthen coordination and policy support, improve national strategy and commercial oil reserve capabilities as soon as possible, and effectively respond to the risk of violent fluctuations in oil prices. The Ukraine crisis has brought a greater impact on the energy industry. Many international oil companies withdrawn from the Russian oil and gas industry, and Russia urgently needs new investors to enter. Asian Petroleum is the main potential partner, but the newly entered foreign investment entity may face the risk of long -arm sanctions in Europe and the United States, and it is necessary to carefully choose to enter the opportunity. It is recommended that my country seize the opportunity to reconstruct the global energy trade pattern after the Ukrainian crisis, further deepen energy cooperation of national energy cooperation along the “Belt and Road”, unswervingly promote the pace of use of RMB pricing and settlement of oil, and enhance China ’s right to speak in international pricing of commodities. Essence

Optimize the structure of overseas oil and gas assets, and use geopolitical risks as an important consideration for overseas layout. High oil and gas prices have increased the valuation of oil and gas assets, which is conducive to the disposal of high -cost overseas assets such as oil sand. However, the rapid rise in international oil prices has expanded the gap between buyers and sellers for the valuation of oil and gas assets, or leads to the continuous wait -and -see attitude of buyers, making it difficult for transactions to achieve. It is recommended that relevant national competent departments strengthen coordination and coordination, promote petroleum petrochemical enterprises to grasp the high oil price window period before the global economic recession, reasonably valuation on overseas oil and gas assets, and accelerate the optimization of asset structure. Based on the Ukraine crisis, geopolitical risks should be used as the primary consideration of overseas oil and gas asset layout, increase investment in overseas low -risk areas, and reduce assets of countries and regions with high geopolitical risks.

The author of this article is the chief researcher of the Petroleum Economics Office of the China Oil Energy Economic Research Institute

- END -