March 31st, combined with the international crude oil supply and demand, geopolitical situation and US dollar, speculation and other factors, on the 29th in Nanjing, hosted by the Guangdong Oil and Gas Association "17th China LPG International Conference", the industry believes that the international oil price may be maintained this year The high level of turmoil and the three possibilities faced by the Iranian issue will have different effects on oil prices.
In 2011, the average price of WTI crude oil was 95 US dollars/barrel, an increase of 19.6%, reaching the second highest point after 2008. The average price of Brent crude oil was 111.23 US dollars / barrel, an increase of 39.9%, setting a record high since the birth of the world's oil industry. The price of WTI and Brent was upside down. The inverse price difference was as high as US$30/barrel, which led to a substantial increase in China’s crude oil import costs. In the whole year, international oil prices rose first and then fell, with high levels of volatility. The overall supply of crude oil was less than demand, and it was slightly tight.
Since the beginning of this year, the supply and demand of crude oil have been slightly loose, but the price of oil has “not risen or risen†and the market bubble has gathered. WTI rose from the end of last year to 99.65 US dollars / barrel up to 109.91 US dollars / barrel, an increase of 10.3%; Brent from 106.51 US dollars / barrel rose to 126.47 US dollars / barrel, an increase of 18.7%. Chen Rui, a senior economist at the China National Petroleum Institute of Economics and Technology, believes that at present, the bubble component in WTI oil prices is 10-15 US dollars per barrel, and the bubble component in Brent oil price is 20-25 US dollars per barrel.
The European debt crisis led to further increase in economic downside risks. This is the main factor in the downward movement of oil prices. Right now, the IMF reduced the world economic growth rate in 2012 to 3.3%, far below the average level of 5% in 2003-2007. If the debt crisis in Europe deteriorates and the global economy experiences a secondary recession, oil prices will fall sharply. The three major agencies have already lowered their oil demand growth estimates. The IEA reduced its 2012 oil demand growth from the 1.16 million barrels per day forecast in August 2011 to 830,000 barrels per day in February this year.
From the supply side, this year's Libya and Iraq’s output growth will boost OPEC supply (an increase of 600,000 barrels per day), non-OPEC production will also increase by 700-900 million barrels per day, of which IEA expects the most optimistic growth (93 million barrels /day). According to statistics, Iraq’s current oil production capacity has reached a record of 2.95 million barrels per day after the war. As the new Gulf export terminal is put into use, its total export volume will reach 2.3 million barrels per day. Libya’s oil production recovered faster than expected. Production in January was close to 1 million barrels per day, and is expected to return to the pre-war level of 1.6 million barrels per day in June-July.
Chen Rui predicts that OECD North America’s oil demand will fall by 109,000 barrels per day this year, Europe will drop by 336,000 barrels per day; non-OECD countries will increase demand by 1.21 million barrels per day, of which Asian countries will increase by 690,000 barrels per day, accounting for half the above.
From the perspective of non-fundamental dollar factors and speculative factors, the factors supporting the strengthening and weakening of the US dollar exchange rate at the same time in 2012 have determined that this year is a year of ups and downs of the US dollar; speculators have become more short-stable, with loose fundamentals. Speculation has lost its breeding ground. Speculators are not strong on the basis of high oil prices. However, if they are favorable to the empty space, loose fundamentals will provide speculators with opportunities for short oil prices. In addition, subsequent changes in the European debt crisis and changes in the international economic situation. Events such as this may still be the subject of speculators’ use.
The Iranian issue is the biggest uncertain factor affecting the trend of oil prices. Recently, the United States and Europe have continuously increased their sanctions against Iran. Iran has held a high-profile military exercise, claiming that the Strait of Hormuz, the United States and Israel said that they will carry out a military strike against Iran and the situation is unprecedentedly tense. In the later period, the three possible conditions of the Iranian issue will have different degrees of impact on the international crude oil market.
First, the United States and Europe continued to increase their sanctions against Iran and Iran’s oil exports were partially suspended. Iran’s export volume is 2.5 million barrels per day, while OPEC’s remaining capacity is 3.6 million barrels per day. Together with Iraq’s recovery of production and the three new oil fields that will soon be put into operation in East Siberia, it can completely offset Iran’s oil disruption, with limited impact on oil prices. However, people’s panic will make speculators continue to use Iranian themes to speculate on oil prices.
The second is that the United States and Europe have adopted tougher sanctions or have waged wars, resulting in the complete suspension of Iranian oil exports. Although the world can make up for the shortfall caused by the release of production capacity, it will cause a certain degree of tight supply and demand, coupled with the remaining capacity to 1 million barrels per day, the market buffer capacity will drop significantly, thus supporting the rise in oil prices. If Iran’s exports are disrupted due to the war, people will worry about the supply situation and the spread of the war. The impact on oil prices may exceed the former.
The third is Iran Strait Hormuz Strait. This means that the trade volume of 17 million barrels/day through the Straits will not be able to make up for it, and the market will suffer from an insufficient supply. Analysts believe that oil prices may rise to over US$200 in the short-term, and countries will take measures to limit oil demand and ease the contradiction between supply and demand. After oil prices rise sharply, they will also drop sharply.
Yuan Jialu, a researcher at Huatai Great Wall Co., Ltd., also believes that the situation in Iran is the most important factor affecting oil prices. The Strait of Hormuz is an important channel connecting the Persian Gulf and the Indian Ocean. The transportation volume accounts for 40% of the world's crude oil trading volume. Although there are three pipelines that can replace the Strait of Hormuz, the transport capacity is relatively limited.
No matter how the Iranian issue develops, it will continue to support oil prices. Chen Rui believes that in the case of the exclusion of Iranian war, it is expected that oil prices will remain volatile this year, WTI oil prices in the 90-110 US dollars / barrel of the most likely, Brent may be slightly lower, for 95-105 US dollars / barrel.
In 2011, the average price of WTI crude oil was 95 US dollars/barrel, an increase of 19.6%, reaching the second highest point after 2008. The average price of Brent crude oil was 111.23 US dollars / barrel, an increase of 39.9%, setting a record high since the birth of the world's oil industry. The price of WTI and Brent was upside down. The inverse price difference was as high as US$30/barrel, which led to a substantial increase in China’s crude oil import costs. In the whole year, international oil prices rose first and then fell, with high levels of volatility. The overall supply of crude oil was less than demand, and it was slightly tight.
Since the beginning of this year, the supply and demand of crude oil have been slightly loose, but the price of oil has “not risen or risen†and the market bubble has gathered. WTI rose from the end of last year to 99.65 US dollars / barrel up to 109.91 US dollars / barrel, an increase of 10.3%; Brent from 106.51 US dollars / barrel rose to 126.47 US dollars / barrel, an increase of 18.7%. Chen Rui, a senior economist at the China National Petroleum Institute of Economics and Technology, believes that at present, the bubble component in WTI oil prices is 10-15 US dollars per barrel, and the bubble component in Brent oil price is 20-25 US dollars per barrel.
The European debt crisis led to further increase in economic downside risks. This is the main factor in the downward movement of oil prices. Right now, the IMF reduced the world economic growth rate in 2012 to 3.3%, far below the average level of 5% in 2003-2007. If the debt crisis in Europe deteriorates and the global economy experiences a secondary recession, oil prices will fall sharply. The three major agencies have already lowered their oil demand growth estimates. The IEA reduced its 2012 oil demand growth from the 1.16 million barrels per day forecast in August 2011 to 830,000 barrels per day in February this year.
From the supply side, this year's Libya and Iraq’s output growth will boost OPEC supply (an increase of 600,000 barrels per day), non-OPEC production will also increase by 700-900 million barrels per day, of which IEA expects the most optimistic growth (93 million barrels /day). According to statistics, Iraq’s current oil production capacity has reached a record of 2.95 million barrels per day after the war. As the new Gulf export terminal is put into use, its total export volume will reach 2.3 million barrels per day. Libya’s oil production recovered faster than expected. Production in January was close to 1 million barrels per day, and is expected to return to the pre-war level of 1.6 million barrels per day in June-July.
Chen Rui predicts that OECD North America’s oil demand will fall by 109,000 barrels per day this year, Europe will drop by 336,000 barrels per day; non-OECD countries will increase demand by 1.21 million barrels per day, of which Asian countries will increase by 690,000 barrels per day, accounting for half the above.
From the perspective of non-fundamental dollar factors and speculative factors, the factors supporting the strengthening and weakening of the US dollar exchange rate at the same time in 2012 have determined that this year is a year of ups and downs of the US dollar; speculators have become more short-stable, with loose fundamentals. Speculation has lost its breeding ground. Speculators are not strong on the basis of high oil prices. However, if they are favorable to the empty space, loose fundamentals will provide speculators with opportunities for short oil prices. In addition, subsequent changes in the European debt crisis and changes in the international economic situation. Events such as this may still be the subject of speculators’ use.
The Iranian issue is the biggest uncertain factor affecting the trend of oil prices. Recently, the United States and Europe have continuously increased their sanctions against Iran. Iran has held a high-profile military exercise, claiming that the Strait of Hormuz, the United States and Israel said that they will carry out a military strike against Iran and the situation is unprecedentedly tense. In the later period, the three possible conditions of the Iranian issue will have different degrees of impact on the international crude oil market.
First, the United States and Europe continued to increase their sanctions against Iran and Iran’s oil exports were partially suspended. Iran’s export volume is 2.5 million barrels per day, while OPEC’s remaining capacity is 3.6 million barrels per day. Together with Iraq’s recovery of production and the three new oil fields that will soon be put into operation in East Siberia, it can completely offset Iran’s oil disruption, with limited impact on oil prices. However, people’s panic will make speculators continue to use Iranian themes to speculate on oil prices.
The second is that the United States and Europe have adopted tougher sanctions or have waged wars, resulting in the complete suspension of Iranian oil exports. Although the world can make up for the shortfall caused by the release of production capacity, it will cause a certain degree of tight supply and demand, coupled with the remaining capacity to 1 million barrels per day, the market buffer capacity will drop significantly, thus supporting the rise in oil prices. If Iran’s exports are disrupted due to the war, people will worry about the supply situation and the spread of the war. The impact on oil prices may exceed the former.
The third is Iran Strait Hormuz Strait. This means that the trade volume of 17 million barrels/day through the Straits will not be able to make up for it, and the market will suffer from an insufficient supply. Analysts believe that oil prices may rise to over US$200 in the short-term, and countries will take measures to limit oil demand and ease the contradiction between supply and demand. After oil prices rise sharply, they will also drop sharply.
Yuan Jialu, a researcher at Huatai Great Wall Co., Ltd., also believes that the situation in Iran is the most important factor affecting oil prices. The Strait of Hormuz is an important channel connecting the Persian Gulf and the Indian Ocean. The transportation volume accounts for 40% of the world's crude oil trading volume. Although there are three pipelines that can replace the Strait of Hormuz, the transport capacity is relatively limited.
No matter how the Iranian issue develops, it will continue to support oil prices. Chen Rui believes that in the case of the exclusion of Iranian war, it is expected that oil prices will remain volatile this year, WTI oil prices in the 90-110 US dollars / barrel of the most likely, Brent may be slightly lower, for 95-105 US dollars / barrel.
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