Breaking out of the peak: how much will oil prices soar
At the end of last week, the EU imposed the 18th package of sanctions against Russia, in which it lowered the price ceiling for Russian oil to $47.6 per barrel. This is about 15% lower than the average market price. Measures against the "shadow fleet" have also been expanded. The experts interviewed by Izvestia analyzed the factors that will determine the vector of movement of oil prices in the coming weeks and believe that the decisions taken will not harm Moscow's interests.
Trump's statement
US President Donald Trump has threatened further sanctions against Russia and its trading partners if a deal on Ukraine is not concluded within 50 days. NATO Secretary General Mark Rutte also confirmed the seriousness of the intentions in his address to the leaders of India, China and Brazil, to which the countries did not hesitate to respond.
Official Beijing expressed dissatisfaction at the beginning of the week and threatened counter-restrictions. And according to Indian Oil Minister Hardeep Singh Puri, New Delhi has long diversified supplies, increasing the number of countries from 27 to 40.
Alexander Schneiderman, head of Sales and customer Support at Alfa-Forex, is convinced that the American leader's attack on one of his strategic partners can be considered bravado.
— There is no shortage of oil in the world, especially after the lifting of production restrictions by OPEC+ countries. The issue is not about suppliers or volumes, but about margins. Russia has become the largest supplier of oil to India, providing almost 35% (according to some sources — up to 44%). And India buys all this volume at a big discount," he says.
According to the expert, Russia ensures a constant workload of Indian refineries, saving these capacities from downtime. At the same time, most of the final product receives high added value and is sent to Europe, which a couple of years ago proudly refused to supply from the Russian Federation. The EU pays at market prices, taking into account logistical costs. With such a scheme, the benefits to the Indian economy, including fiscal revenues, are obvious. It is possible to replace the falling volumes, but with large losses in profitability, the source concludes.
Schneiderman also predicts an immediate rise in oil prices in the event of a further escalation of the situation. As of Monday, oil is already getting more expensive.
Nikolay Dudchenko, an analyst at FG Finam, agrees with this opinion.
— Let me remind you that Russia produces about 9 million b/d, which is about 8.5% with global demand of 105 million b/d. This is one of the main players, even despite the limitations. We are talking about significant amounts that cannot be replaced quickly," he added.
In a big minus
The statement by the Indian Oil Minister immediately led to the formation of chaotic market sentiment, said Tamara Safonova, associate professor at the Institute of Economics, Mathematics and Information Technology at the Presidential Academy.
— Historical experience shows: Countries that have abandoned Russian energy resources are experiencing economic stagnation, and a return to cooperation is becoming difficult. Even if we assume that such a large importer as India will refocus on acquiring resources from alternative sources to the detriment of its economy, there will be an operational transformation of cargo flows and a queue of new interested buyers will line up," she says.
According to the economist, the price of oil in the foreseeable future will be influenced not by the "Indian factor", but by events in the hot spots of the planet related to the operability of energy infrastructure facilities and the functioning of transport corridors.
Head in the sand
Oil production is growing in the world, but not oil reserves, Rosneft CEO Igor Sechin said at the St. Petersburg Economic Forum (SPIEF) in June. According to him, world oil reserves are currently at their lowest levels in the last five years — about 5.5 billion barrels, with a trend towards further decline due to increased production.
At the same time, the value of oil as an energy resource is still high, and it is impossible to replace it by switching to green energy sources. Sechin called the contrary statements "blind faith."
According to him, each subsequent discovered energy carrier had a higher energy flow density compared to the replaced one. For example, oil has replaced less efficient coal, and gas and nuclear energy have a higher density than oil. At the same time, both solar and wind energy are dozens or even hundreds of times inferior to traditional energy.
Thus, due to falling reserves and the growth of dwindling resources, the cost of a barrel of oil simply cannot logically equal the price ceiling set by European officials. The head of Rosneft suggested that the real goal was the European Union's desire to increase the efficiency of its purchases from Russia, rather than reduce Russian budget revenues.
The Genie from the bottle
In the medium term, the price of black gold will be influenced by the tariff policies of the countries, the analysts surveyed agree.
So, last week, Trump's ultimatum on import duties expired, and it was decided to extend it until August 1. Some countries have announced the acceleration of negotiations with the United States on trade deals. However, last week, Trump again began threatening tariffs on his neighbors, Canada and Mexico. Tariff wars are a negative factor for the market, as they raise concerns about global oil demand.
According to Finam analyst Nikolay Dudchenko, the trade wars factor is complicated by geopolitical pressure, including Trump's ultimatum on 50 days and another package of anti-Russian sanctions from the EU.
— We do not believe that EU sanctions will have a significant impact on the global oil market. Experience shows that businesses have learned quite well how to adapt to restrictions. With regard to Trump's threats, it is important to understand that 50 days is quite a long time, during which many events can happen. And Trump can move this deadline to the right, as he has done repeatedly with other restrictions. The current strategy of the White House is to maximize the overstatement of rates, which is usually followed by the so-called detente. Therefore, it is premature to fear the statements of the American president," the analyst believes.
High season
Seasonal growth, a factor in the growth of oil demand, cannot be ignored: during the holidays and summer holidays, car traffic increases, and hence fuel consumption. The growth of automobile movements of Americans on Independence Day was noted by Nikolai Dudchenko.
The same is true for Russia with its long distances, emphasizes Olga Orlova, head of the Industry department at the Institute of Oil and Gas Technologies.
— Every year the road infrastructure is improving and car tourism is growing. The demand for Russian attractions and notable natural sites is increasing. And not only for Russian ones: the number of foreign car trips among Russians increased by 8-10% in 2024, which spurred the authorities to more quickly resolve the issue of introducing a single blue card — an insurance policy. The demand for driving holidays will grow, among other things, due to the concepts of the development of autotourism, which, in particular, has been adopted in Russia," says the expert.
In addition to the boom in car travel, Ekaterina Kosareva, managing partner of the analytical agency VMT Consult, also noted the agricultural seasonal factor.
— Already in the middle of July, a month after the end of the sowing season, the harvesting campaign begins. Agriculture is the main consumer of diesel fuel in the global breadbaskets. The world's population is growing every year, which means that the need for food and crop cultivation is growing," she says.
The digital factor
According to the calculations of researcher Alex de Vries-Gao from the Free University of Amsterdam, by the end of 2025, almost half of all electricity produced on the planet will serve data centers in one way or another, and AI will surpass the mining industry in terms of consumption.
At the same time, the estimates are approximate, as IT giants are in no hurry to share information. The researcher notes that Taiwan Semiconductor Manufacturing Company alone, which manufactures chips for neural networks, doubled its production capacity in 2024.
Taiwan Semiconductor Manufacturing Company Plant
AI and the Internet of Things, various specialized industrial neural networks, the use of industrial robots and drones, as well as clean technologies are all part of the so—called sixth wave of innovation that is already covering the world, comments Ekaterina Kosareva
— It would be extremely naive to believe that such a huge energy-intensive infrastructure can be serviced by solar energy. That means oil. as a basic energy source. it will be in demand for a very long time. High demand with dwindling resources will determine the cost of a barrel. Therefore, the price ceiling of $47.6, which was approved by the Europeans, is market nonsense," the analyst concludes.
Forecast
Currently, the price of Brent crude oil on the spot market is close to its average value over the past 200 days, that is, at about $69 per barrel.
— We admit that the price increase may be continued this summer. In the short term, the overall trend remains declining (bearish). We assume that the average oil price for the current year will not exceed $70-71 per barrel. A significant increase in the value of black gold may occur in the event of a geopolitical escalation, for example, with a new round of events in the Middle East," concluded Nikolai Dudchenko.
He added that a monthly market review from the cartel will be published this week, which will not have a significant impact on prices, but which is still worth paying attention to.
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