The US Limited Price Order: Why should Russia sell $ 44/barrel?

Wen | Chen Jiulin

No one expected that in 2022, an energy war from the energy output country and the energy input country of energy will cause many people's lives and even the entire world to fall into chaos.

On September 6, local time, on the basis of prohibiting or restricting Russian energy, the Deputy Minister of Finance, ADewale Adeyemo, said that it will set up a "guidance" limit for Russian oil export prices through a simple mechanism. Adeyemo said the "guidance price" will be set to $ 44/barrel. This is the cost of oil costs that Russia had previously estimated. Adeyemo emphasized that the price will not be set below Russian production costs, because the level of $ 44 can still encourage Russian oil production to avoid excessive rise in oil prices in the market. It can also limit Russia from this energy crisis. Profit.

The US sanctions on Russia seem to be effective at first glance, but it is actually a very ridiculous thing and it is difficult to achieve the expected results.

Will the US -Russian sanctional price limit order work?

As we all know, in the market, the decisive role in the price of goods is undoubtedly two major factors of supply and demand. In the current market, those who really have the initiative are actually Russia.

First of all, from the demand side, for the current United States and Europe, the most impact is inflation. Public data shows that in August, the inflation rate of the euro area was 9.1%at an annual rate, exceeding market expectations, and reached a record high. This year, Europe also encountered severe drought. About 47%of regions faced the risk of drought, and 17%of the regions were in a more serious alarm state. Senior economist at the Euro Zone of the Dutch International Group pointed out that energy problems and arid weather will continue to put pressure on the price of commodities in the next few months, and inflation will hardly see signs of relief in the short term. In order to be able to cope with inflation and suppress demand, the European Central Bank has raised interest rates 50 base points on July 21 this year. This is also the first time since the European debt crisis began to raise interest rates. Moreover, the European Central Bank also ended the quantitative easing policy.

On the other hand, as early as March this year, the rate hike process began and accelerated in June, July, and September. In terms of inflation, in June, the US CPI reached 9.1%, a year -on -year increase of the largest value since November 1981. According to some US media reports, at present, American families spend more than $ 717 per month. Such a high inflation forces the Federal Reserve to continue to respond to interest rate hikes.

High inflation not only makes European and American people unbearable, but also for politicians in the elected country. The results of the integration of multiple polls of the US polls showed that the average support rate of Biden was only 38%, which is the lowest record of the US president. One of the most important impacts is the inflation rate of the United States. European politicians are also facing the same situation. On August 21, the results of the German polls showed that only 25%of people supported Prime Minister Shuorz, but 62%of people were dissatisfied with him. Only 27%chose to support the government. 65%of the people are dissatisfied with the government, the most important reason is inflation; in France, the current support rate of President Macron also dropped to 37%; in the UK, although Boris resigned directly is personal behavior ethics, but in fact It is closely related to the people's grievances caused by high inflation.

From the perspective of energy supply, Russia, which is in OPEC (OPEC)+important positions, accounts for 55%of global oil supply. Although Biden himself and leaders in some European countries have carried out the "Middle East" that lobbying oil production, but the results of lobbying are unsatisfactory. Just recently, the cooling of the weather and the shelter of the Iran nuclear agreement, the trend of energy prices tilted to Russia again. Once Russia decreases supply oil prices, the rise and fall of energy prices will further affect the trend of Russia and Ukraine's conflict.

Therefore, the US sanctions on Russia that the United States calls through the formulation of the "upper limit of the price" of energy seems to push the energy prices of the international market very low. In fact, it is a wishful thinking of reality and market logic. From the perspective of the regularity of supply and demand balance, the rise and fall of international oil and natural gas prices at this stage mainly depends on the actual significance of Russia's important suppliers -the actual significance of the "price limit order". At the same time, the attitude of China and India, which is an important oil importer, cannot be ignored. As the largest buyer in Russia and India, as long as the largest buyer in Russia and natural gas, as long as you insist on buying or even expanding oil and natural gas imports in Russia, the US price limit measures will be difficult to achieve. In addition, if OPEC countries choose not to increase production or less output, the price limit order will be a piece of paper.

Attracted by the high profits of oil and gas, oil manufacturers and even related investors in countries around the world have begun to move in the market for investing in oil and gas production or purchase of oil and gas resources, and some have gradually injected new oil and gas into the market. Among them, Algeria, Libya, Israel, coupled with the natural gas exporting countries such as Qatar and Norway in the Middle East, have begun to expand production capacity to seize market cakes; even shale oil manufacturers in the United States, such as Western Petroleum and Exxon Mobil, are constantly constantly Land increase the market. The power of this market is a catalyst that can promote the decline in oil prices than the US price limit order. If oil prices fall in the future, it is not the role of the US price limit order, but the power of supply and demand balance formed by high profits for oil and gas. Of course, Russia can maintain high oil prices by reducing production. However, for Russia, which is currently sanctioned by economic sanctions, it will definitely be worse. At the same time, the rapid interest rate hikes of central banks around the world to suppress demand. In the next few years, energy prices are likely to be caught in a "price war" situation that demand shrinkage and excess supply. But it is by no means because of the "price limit order" of the United States, but the regularity of the balanced supply and demand balance and the speculation of the market. Although the price of oil and gas has fallen in the near future, as the northern hemisphere is in winter, it is expected that oil and gas prices will still be maintained at high prices in the short term.

Will Europe repeat the "Lehman brothers" wrong?

When Western countries led by the United States are constantly suppressing demand through interest rate hikes and other means, Europe is facing "Lehman moment". Not to mention European industrial enterprises, such as Bathf, Mercedes -Benz and other companies in Germany, there have been different degrees of suspension of work and reducing production capacity. Even the American aluminum company also said that its production of aluminum smelting plants in Norway will be reduced. One; Norsk Hydro ASA also said that it is planned to close its aluminum smelter in Slovakia at the end of September; Speiragmbh plans to reduce the production capacity of the German smelter by half. In addition to the failure of the real economy, at the time of de -capacity, affected by the Fed and the European Central Bank's rapid interest rate hikes, many European energy companies have been in a liquidity crisis and need to be injected by emergency loans or shareholders.

In the financial field, due to the sharp rise in European natural gas and power futures prices, the losses established by European power and energy giants in the futures market have heavy losses and need to pay huge margins. Otherwise, they will face the risk of "bursting". Due to the influence of the natural gas supply of Beixi 1 pipeline from time to time due to the endless period of Russia's Natural Gas Industry Co., Ltd., the German energy giant Uniper has issued a "help signal". Before the start of the Russian and Ukraine conflict, 55%of the total natural gas consumption in Germany relied on imported from Russia, and natural gas was an important source of industrial production and power supply in Germany. industry. Natural gas consumption in Germany is mainly supplied by 3 companies, namely UNIPER (35%), RWE (35%), and VNG (30%). Among them, Uniper is the largest Russian natural gas importer in Germany and one of the largest public institutions in Europe. When Beixi 2 was forced to stop, the three major manufacturers began to buy natural gas from other channels. In addition to buying gas from the spot market, Germany, the largest Russian natural gas importer, even began to use natural gas inventory that was originally used in severe winter or other urgent situations.

UNIPER has also become the first German energy giant in this round of gas supply crisis to the government to ask the government for help. Will Uniper or other similar European companies become the European "Lehman Brothers" of this year or next year? As we all know, in 2008, it was originally the fourth largest investment bank in the United States, the Lehman Brothers. In the case of extremely sensitive and fragile markets in Europe and the United States at that time, due to the failure of investment, it was announced that it was announced to apply for bankruptcy protection after the negotiation acquisition failed. , Triggered a global financial tsunami. Although occasional incidents cannot be simply compared, there is often amazing similarities in history. It is the so -called "under the sun, there is nothing new."

The reality environment is that the spot price of oil and natural gas has risen, but also the impact of the temporary disconnection of Russia's natural gas. On September 5, the price of natural gas in the European natural gas futures trading market rose 72.5 euros to reach per MWh time per MWh time 281 euros, a significant increase of 35%from the market price on September 2. In the international market, not only energy companies participate in energy futures, many companies in other industries, including physical enterprises, pension institutions, and insurance companies, are also active in the futures market, or to make a set of time preservation to ensure the stable spot price of the spot price , Or speculate for profit. In this context, the rise and fall of energy prices will directly lead to a stable European energy futures market jumping up and down, so that European companies that were originally at low interest rates have caused huge liquidity risks due to the impact of the impact of liquidation, and even Domino has formed Domino. Bone card effect.

As an alliance composed of 28 countries, the debt issues of their member states themselves are already burnt. Under the double impact of energy and economy, compared with the financial crisis caused by the "Lehman Brothers", will there be any occurrence of whether there will Dripping, or a new problem.

Responsible editor | Yang Lin

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