On March 7 (Monday), affected by the news that the United States and the European Union may ban the import of Russian crude oil, the international crude oil price climbed to a new high. The US and Burundi crude oil futures soared at the opening, and both rose by more than 10% at the opening. WTI oil prices opened at $129.47 a barrel, reaching a high of $130.50 a barrel, while Brent oil prices opened at $122.79 a barrel and reached an intraday high of $139.13 a barrel, approaching the $140 a barrel mark. Both crude oil futures hit their highest levels since 2008. Deng Zhenghong’s soft power said that under the strong pull of the risk premium engine supported by geopolitical conflicts, a new round of global oil value expansion is advancing rapidly, and oil soft power has been fully released and continuously amplified. , the international crude oil price has been continuously pushed to new highs, and oil-producing countries are reaping the excess value returns brought by the constantly increasing risk premium. Deng Zhenghong originally expected that oil prices would remain high even without the intervention of obvious geopolitical factors in this round of oil value expansion, but now the risk premium arising from the situation in Russia and Ukraine continues to soar, thus accelerating the pace of oil value expansion, approaching the rate of per barrel The oil price of 140 US dollars has threatened the interests of all countries in the world to a certain extent, especially the global economic recovery. The problem now is that as long as the war between Russia and Ukraine does not end, oil prices will definitely rise, but there are different opinions about how much it will rise. There are claims of $150 per barrel, $185 per barrel, and even A barrel of $200 argument. Deng Zhenghong believes that no matter how high the oil price rises, the market will eventually return to the right path, and all these gains are just temporary pains. How to solve the problem of idle capacity. That’s what the industry calls it, destroying demand through high oil prices and bringing the market back to fundamentals.
If disruptions to Russian supplies continue, global benchmark Brent crude could hit $185 a barrel by the end of the year, while some hedge funds are targeting $200, JPMorgan said. Goldman Sachs Group Inc. said oil could hit $150 in the next three months if there is no Russian supply in the market. After international oil prices rose to their highest levels since 2008, traders rushed to buy call options, with some even betting that oil futures would rise above $200 by the end of March. Intercontinental Exchange data showed that at least 200 call options on the May contract of Brent oil futures were traded on Monday, with an exercise price of $200 a barrel, and the option buying price soared 152% to $2.39 a barrel. Those options will expire on March 28, three days before the contract settles. In addition, the price of a call option with a strike price of $150/barrel on the June contract of Brent oil futures rose 100% from last Friday, and the price of a call option with a strike price of $180/barrel rose 110%. Analysts at Bank of America said that if most of Russia’s oil exports were cut off, there could be a shortfall of 5 million barrels or more, meaning oil prices could double from $100 to $200 a barrel. Hedge fund Westbeck Capital Management, which has long operated oil futures and stocks, also said recently that the expected prospect of Russia’s restrictions on energy exports could push oil prices above $200 a barrel.
With energy security a priority as sanctions widen, JPMorgan shares with Goldman Sachs that an immediate reduction in demand is the only way to rebalance the market in the short term, given the supply shock and the lack of a breakthrough in peace talks. In practice, this means two scenarios for oil prices in the future: an ugly and painful scenario that doesn’t lead to a global economic collapse; and a potentially devastating global recession (if not a depression) , the global economy will collapse. In the first case, JPMorgan admits that the current supply shock is very large, and the bank believes that if Iran does not have immediate oil supplies, then oil prices need to rise to $ 120 / barrel and hold for several months, which may lead to this year. 1.2 million bpd lower in demand in 2022, leaving 2022 oil consumption 550,000 bpd below 2019 levels. A more dire scenario is that the disruption to Russian oil production will continue throughout the year. In this case, Brent crude oil prices could rise to $185 a barrel by the end of the year, which could lead to a sharp drop in global oil demand by 3 million barrels a day. The key to this remarkable upward trend is that even if shale oil production responds to price signals, labor and cost factors are considered, and shale oil production will not increase by more than 1.4 million barrels per day this year.
Harris, chief economist at Bank of America, echoes JP Morgan, who believes, “The biggest missing element in the sanctions so far is that they have little impact on Russian energy exports, and the problem is that we don’t have much confidence in predicting what’s going to happen next. Confidence.” In Harris’ view, he is more concerned about the sharp escalation of attacks and the energy sanctions that come with it. In Bank of America’s view, this would have a far more dire outcome than JPMorgan had expected, namely a major shock to global markets if the West cut off most of Russia’s energy exports. Francisco Blanch, head of global commodities and derivatives research at Bank of America, estimates that, all else being equal, a change in supply of 1 million barrels per day could raise prices by about $20 a barrel. If most of Russia’s oil exports are cut off, even some, there could be a supply gap of 5 million barrels or more per day, which would offset the release of strategic reserves and the increase in OPEC+ production, meaning oil prices could fall from $100 doubled to $200 a barrel.
Scott Sheffield, chief executive of Pioneer Natural Resources, the largest independent operator of U.S. shale oil, said the U.S. was not yet able to replace Russian crude supplies this year, although he agreed with U.S. sanctions on Russian oil. Sheffield said the move could send crude prices soaring as U.S. producers cannot quickly fill the supply gap. West Texas Intermediate crude was at $112 a barrel on Friday, 90% higher than a year ago. Sheffield said on Friday: “If European and American countries announce a ban on importing Russian oil and natural gas, oil will likely rise to $200 a barrel.” The current oil production in the United States is 11.6 million barrels per day, much lower than before the epidemic. 13 million barrels of production peak. Pioneer Natural Resources previously disclosed that it plans to increase oil production by no more than 5% this year. Sheffield said shale regions such as western Texas will increase production by about 700,000 bpd this year, and could double to 1.4 million bpd by 2023 and 2024. Sheffield explained, “The increase in production is a two- to three-year plan, because shale oil in the U.S., even with an additional rig, takes 6 to 8 months to first produce. Labor shortages, hydraulic fracturing equipment shortages, drilling rigs Shortages, shortages of sand still need to be resolved. We cannot change planned production this year, and filling Russia’s supply will require a ‘global concerted effort’.” In recent days, both Democratic and Republican politicians have called for the United States to impose an oil embargo on Russia, That includes Democratic-controlled House Speaker Nancy Pelosi. But the White House objected to concerns about the impact the move would have on U.S. energy prices. Analysts said the export ban on Russia could push up oil prices significantly, thereby boosting revenues from U.S. shale blocks. U.S. shale plays have been lucrative thanks to a rebound in the crude oil market in recent months.
【Author’s brief introduction】Deng Zhenghong, the father of China’s soft power, founded Deng Zhenghong’s soft power thought, established corporate soft power theory and soft power index tools, created energy soft power and low-carbon soft power, and was the first to quantify and evaluate soft power systems , has a complete set of independent intellectual property rights based on the soft power index and soft power value evaluation of enterprises, cities and countries, and exclusively publishes companies (top 500 in the world), cities (the soft power ranking of cities and regions in mainland China) and countries (global soft power rankings). Top 100 Soft Power Rankings), chief planner and writer of State Grid’s “Enterprise Soft Power Series (Core Value, Core Model, Core Strength)”. 18 months ago, he accurately predicted that the international oil price would plummet in March 2020, and participated in the research on shale oil development of the National Energy Administration, which provided a useful reference for the formation of shale oil development ideas in line with my country’s characteristics. Published “Shale Strategy: The Federal Reserve in Action”, “Shale Strategy II: Unconventional Changes”, “Shale Strategy III National Oil (Breakout from the Dilemma of Low Oil Prices, Production Reduction Alliance in Action, Geo Risk of Oil-producing Countries, Epic Crude Oil Crash)” “Soft Power: The Way of Chinese Enterprises to Break the Game”, “Smart Power: Smart Strategies in a Competitive Environment”, “Rebuilding America: The Secret Remodeling and Soft Expansion of America’s Core Interest Industries”, “The Interconnection of Great Powers: Listing and Contesting”, “Lower Power” Carbon Innovation: Profitable Approaches to Green Trends, Green Companies: An Operational Guide to Low-Carbon Business Opportunities, etc.Return to Sohu, see more
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