Obviously, it is not in the interests of the United States, Russia and Saudi Arabia for oil prices to run at a low level below the cost price for a long time. This is the material basis of tripartite negotiations. So can we negotiate? I think it can be done, but it is almost impossible to do it right away.
Let's take a look first. What do the three countries need respectively?
Saudi Arabia: In the past two years, OPEC+Russia has been cutting production in accordance with the production reduction agreement to protect oil prices. The increase in shale oil production in the United States has completely filled the share of production reduction, which is equivalent to the benefits brought by Saudi Arabia, Russia and other countries at the expense of production reduction. America has caught it. Saudi Arabia certainly doesn't want to. How to make full use of the value of oil is a problem that must be considered after the new Saudi Crown Prince takes office. This time, Saudi Arabia launched a price war. In fact, it is a bit of a cross the rubicon. Therefore, for Saudi Arabia, as long as everyone is willing to cut production and let oil prices rise, the negotiations will be successful.
United States: The interests of the United States are also very direct. This week, a large oil company declared bankruptcy. It can be seen that oil prices have plummeted and shale oil companies with high production costs are indeed struggling. In this case, the interests of the United States are very clear. What if your own shale oil company can produce it? Reduce production and protect oil prices. However, shale oil was not included in the Organization of Petroleum Exporting Countries before, so it is impossible for Americans to use it as before. Whether it can be negotiated depends on how much interest the United States has given up.
Russia: Russia is the most active now. Therefore, what Russia wants in this negotiation is crucial. In my opinion, Russia may want two things. First, shale oil should be included in the Organization of Petroleum Exporting Countries, and everyone should reduce it together. Otherwise, there is no point in reducing production, and everyone can't subsidize you in the United States. The second is to lift the sanctions. Russia has been sanctioned for many years and has had a hard time. All these years have been supported by China. So you can see that this meeting is not easy to talk about.
Therefore, understanding the main appeal points of the three parties will help us to judge the later trend of oil. Personally, the probability of a negotiation is extremely low, and it is bound to go back and forth several times. In this case, it is not ruled out that the price of crude oil will fluctuate in the future, so it is no problem for people who bargain for crude oil to start early, and those who chase up are likely to be buried, and oil prices will definitely rebound in the end, eventually reaching a new market balance. Judging from the current economic situation and demand, it is a reasonable range for oil prices to return to 30-40 dollars first. As for whether it can return to 50-60 dollars, we should first look at the game of direct pressure from oil-producing countries, and then look at the degree of economic recovery.
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Affected by the plunge in oil prices, the global stock market plummeted continuously, which was terrible. Us stocks have triggered the fuse mechanism. The Dow Jones index plunged 2000 points. Affected by the epidemic, the global economy itself has downward pressure, and the oil price war is equivalent to another knife.
1. The plunge in oil prices reflects the pessimistic expectation that the epidemic will hit the global economy. After the global economic growth slows down, the demand for oil will naturally decline, so the decline in oil prices reflects the pessimistic expectation of the decline in demand.
Second, the plunge in oil prices has dealt a fatal blow to the finance and economy of major oil companies and some oil-producing countries. The recent plunge in US stocks is not unrelated to the plunge in oil.
Third, a large number of high-yield bonds issued by oil giants are sold off, which will also trigger a huge earthquake in the US bond market. In the past few years, American shale oil companies have issued a large number of bonds at high interest rates. If an oil price war breaks out, the capital chain may collapse and the debt cannot be paid.
China is opening up new infrastructure to stabilize the economy, and the oil price collapse will not have much impact on China oil service enterprises. Therefore, China's economy is likely to take the lead in getting out of the crisis caused by the epidemic and boost the confidence of the China market.
The decline in crude oil cannot explain the recovery of the world economy.
First of all, we understand why crude oil will fall in 2020.
The world crude oil producing areas are composed of three parts: the United States, Russia, the Organization of Petroleum Exporting Countries and non-OPEC oil producing countries.
The production cost of shale oil in the United States is the highest, and its break-even price needs to be between 50 and 55 dollars per barrel, and the production cost is between 35 and 45 dollars. If it is less than $30 per barrel, American shale oil companies will not be able to maintain normal production and face bankruptcy for a long time.
Russia, the Organization of Petroleum Exporting Countries and non-OPEC countries can only pump crude oil from underground, so their production cost is about $0/0 per barrel, which is far lower than that of shale oil in the United States.
The United States has always dominated the world and imposed economic sanctions on Russia for a long time. Russia is a big exporter of crude oil, and its crude oil revenue occupies a major position in Russia, occupying the largest market share in the world. Under the influence of the epidemic, the world's demand for oil has decreased, and the three major oil-producing countries, the United States, Russia and Saudi Arabia, are making "small abacus" for themselves. On March 6th, OPEC's proposal to cut production was rejected by Russia, a non-OPEC country, and no agreement was reached at the meeting. On March 8, Saudi Arabia announced that it would cut the oil price to 6-8 USD per barrel, and at the same time announced that it would increase the daily output of crude oil from 9.7 million barrels to 6.5438+million barrels from April, and if necessary, to 6.5438+0.2 million barrels.
Saudi Arabia set off a price war, aiming at non-OPEC oil producers such as Russia, hoping to force Russia to return to the negotiating table to agree to cut production and push oil prices back to a high level. At the same time, Saudi Arabia also intends to take this opportunity to suppress high-cost oil and gas and expand market share.
The decline in crude oil prices is entirely a "three-country kill" staged by the United States, Saudi Arabia and Russia for their own interests.
The rise in crude oil prices is that the three countries do not want to sell at such a low price for a long time. Affected by the epidemic, the demand for oil has been greatly reduced. After the three countries fought, it didn't do anyone much good. It is reported that Russia and the Organization of Petroleum Exporting Countries are willing to negotiate production reduction again on April 6.
All countries are seriously affected by the epidemic, but the epidemic in China has been very well controlled and is coming to an end. We are back to the busy work of resuming work and production. China is a big importer of crude oil, and it needs a lot of oil. These factors have led to the rise of crude oil prices, which is actually a return to normal.
No, an emergency meeting of the Organization of Petroleum Exporting Countries will be held next week to discuss the reduction of crude oil production per day100000 barrels. Even if an agreement is reached, the supply exceeds demand during the epidemic period, and the reduction of 6.5438 million barrels is too small. In addition, it is uncertain whether an agreement can be reached. Because it involves the interests of all parties, the rise of crude oil price is only stimulated briefly by the meeting of the Organization of Petroleum Exporting Countries, and crude oil price will rise repeatedly.
The collapse of oil prices may put pressure on the economies of many countries, but the worst is Iraq. The data shows that Iraq's crude oil production and export volume in March were higher than those in February, but its income decreased by nearly half.
According to Agence France-Presse, Iraq's crude oil sales in March was 654.38+005 billion barrels, with a profit of 2.99 billion US dollars. In February, the sales volume of crude oil was 98.3 million barrels, but the revenue almost doubled from March to 5.5 billion dollars.
There is only one reason for this phenomenon-the sharp drop in oil prices. The Iraqi Oil Newspaper quoted the announcement of the Iraqi Ministry of Oil as saying that the federal government of Iraq has exported 3.339 million barrels of oil, with an average price of 32.73 US dollars per barrel. According to Agence France-Presse, the Iraqi oil minister told local media that the price of oil in Iraq is usually about $4 lower than Brent crude oil. In the past few weeks, the price of Iraqi crude oil has been as low as 2 1 USD per barrel.
Looking forward to the market outlook, because Saudi Arabia lowered the official oil price in April ahead of schedule, Iraq, which usually relies on the price signal provided by Saudi Aramco as the pricing basis, can't escape the fate of further price reduction.
According to market information, Iraq set the official price of Basra light crude oil sold to the United States and Asia in April at a discount of $0/.05/barrel and $3.2/barrel respectively, and set the official price of Basra heavy crude oil sold to Asia in April at a discount of $5.3/barrel, which was quite alarming.
Although theoretically, Iraq can still partially offset the losses caused by the price war by increasing production and export volume-that is, taking the route of small profits but quick turnover, it is obvious that the domestic economic system of Iraq cannot withstand such an impact because the oil price has fallen too much.
How important is oil revenue to Iraq? We can get an intuitive solution through this set of data:
It is reported that Iraq is one of the economies with a single economic source in the Middle East, and its oil revenue accounts for about 95% of the government's fiscal revenue budget.
In other words, assuming that Iraq's draft budget for 2020 is about $654.38+03.5 billion, according to the current oil price, Iraq can only earn about $4 billion at most by selling oil, which is about 30% of the budget. In 20 19, the annual average oil price was as high as $56 per barrel. More seriously, if the oil price does not improve, by the end of 2020, Iraq may consume all its foreign exchange reserves totaling about 62 billion US dollars, and finally it can only rely on the assistance of the International Monetary Fund.
As we all know, Iraq's economic development level is not high, and 2020 is a crucial year for Iraq to reshape its domestic economic system. It is reported that the Iraqi government has previously issued the largest budget in history and is committed to improving the dilapidated infrastructure in the country. Some analysts believe that this huge budget is largely a response to the large-scale protests in 20 19. After years of weakness, the Iraqi people have been very dissatisfied with the lack of public services and high unemployment rate.
In view of this, Iraq has done everything possible to deal a heavy blow to the collapse of oil prices.
Last week, Iraq proposed that all foreign oil companies operating in its territory cut their budgets by 30% without affecting crude oil production.
In addition, Iraq also actively called on the Organization of Petroleum Exporting Countries to hold an emergency meeting to discuss ways to support oil prices.
Some analysts also pointed out that perhaps Iraq can only expect the United States to intervene in the price war, or coordinate production cuts in many ways.
As the saying goes, it never rains but it pours, which seems to be the most appropriate way to describe Iraq now. In addition to the sharp drop in oil revenue, the epidemic situation in Iraq is not optimistic. As of April 1 day, there were more than 720 confirmed cases in Iraq, about 180 cases were cured and 52 cases died. The federal government has to bear the income of 7 million government employees, while domestic life is almost paralyzed and private enterprises are on the verge of bankruptcy.
On March 9th, the first confirmed case of COVID-19 was found in southern Iraq, and the epidemic spread near Basra, an oil-producing area, which is likely to endanger local oil production. To make matters worse, the Iraqi government's monthly deficit is as high as $2 billion, and important domestic industries are rarely privately owned. Federal authorities can only raise less than $50 million to fight the epidemic.
The price of crude oil has rebounded sharply in the last two days, with a maximum increase of 46.6% a day, which is absolutely unprecedented in the history of this market. So does this surge in crude oil indicate economic recovery?
I think it actually shows that the economy is very difficult, because the surge in crude oil is mainly due to the agreement between Russia and Saudi Arabia to reduce production by 6.5438 million barrels per day. This time, it was a sharp rebound caused by production cuts, not because of economic recovery. The reason why the output will be reduced is because the economy is expected to deteriorate and the demand will be reduced, so the situation of crude oil plunging can only be stopped by controlling the output.
The capital market is very risky. Large institutions will use this good news to speculate, and then they will restore calm. At that time, crude oil will still fall in the old way. Only after the global economy really recovers will the demand for crude oil increase and crude oil rise.
In fact, the questioner of this question also knows the answer. Obviously, the answer is no, and everyone should agree with it. The reason is not difficult.
First, the epidemic is not over. If there is an epidemic, you will either face death or need isolation. Naturally, everyone chose isolation. Since isolation is needed, the economy will be affected. Therefore, don't expect the economy to recover until the epidemic is over.
Second, the complications of the epidemic, the epidemic has punctured the bubble of the world economy, which is just like it is not terrible for us to catch a cold, but it will be troublesome if the cold causes other diseases. So is the economy. Is the epidemic terrible? The epidemic is not invincible. It is only a matter of time before the epidemic is defeated, but the duration is different. For example, in the United States, the epidemic punctured the bubble of the stock market, and the stock market fell, which triggered a liquidity crisis. If the epidemic continues, it may also trigger a serious economic crisis. Therefore, the epidemic is not terrible, but the complications of the epidemic. Now, under the impact of the epidemic, there are symptoms of economic crisis.
To sum up, it is obvious that the economy will not recover before the epidemic is over, and it will decline day by day. If the epidemic continues, it will also trigger an economic crisis.
Why did crude oil rise?
First, it fell too much and needed technical correction.
As shown in the above figure, from the high point of 65438+ 10 in 2020, crude oil fell by 65% in less than three months, with no obvious rebound in the middle. Such a big drop, not to mention the fundamentals, needs to be corrected technically.
Second, major oil-producing countries suffered serious losses and people's hearts rose.
Judging from the cost of crude oil exploitation, except for a few Middle Eastern countries, most oil-producing countries are losing money, especially the United States, which has closed down and reduced production. Because the price of crude oil is too low and has reached an unreasonable position, it is obviously unreasonable for oil-producing countries to operate at a loss. So this position is the growth of people's hearts, because everyone knows that such oil prices are unreasonable and still rising. So an unreliable Twitter in the United States detonated the oil price.
Summary: The oil price has risen because the current oil price is too unreasonable, and the oil-producing countries are operating at a loss. Therefore, the current rise in crude oil is not economic recovery, but the return of crude oil value. This increase is unsustainable because there is no support from the demand side.
Generally speaking, the rise in crude oil prices indicates that the relationship between supply and demand has reversed, and the increase in demand has led to an increase in prices, which is a clear sign of economic recovery. However, this relationship is not established in this round of crude oil price decline, so even if the crude oil price rises now, it cannot be said that the economy has recovered.
Crude oil is standard, and the price of industrial products is determined by supply and demand. There may be two reasons for the decline in crude oil prices. 1 The reason is the decrease in demand, and the second reason may also be the increase in supply. Now the second situation is that in order to retaliate against the bankruptcy of the production reduction agreement with Russia, Saudi Arabia decided to increase production and reduce prices, forcing Russia to return to negotiations. The expansion of table use and supply and the reduction of oil export prices have caused the global crude oil price to fall, which has also superimposed the global economic epidemic.
At present, the price of crude oil has rebounded a lot from the lowest point. The reason here is not that demand has rebounded. From the perspective of the United States, the moment when the economy has suffered the most severe impact has just arrived. Therefore, the demand for crude oil will remain weak for at least a few months. The reason for the increase in crude oil prices lies in market news that the President of the United States is willing to mediate between Saudi Arabia and Russia, so that both sides can reach a production reduction plan that is relatively satisfactory to all parties. If established, crude oil suppliers will definitely be reduced to a certain extent, which will benefit oil prices.
But after the news came out, both sides clarified the news to varying degrees. At least for now, Saudi Arabia and Russia have no intention of ending the price war. Therefore, before the demand really recovers due to economic recovery, low oil prices are likely to last for some time, and it is difficult for oil prices to return to the normal price above $50.
Factors of current oil price increase:
1, the global epidemic situation in COVID-19, especially in international oil producing and exporting countries, is getting more and more serious. They will stop production, quarantine and epidemic prevention, including oil-producing enterprises. As a result, the international crude oil supply will be reduced, especially the call between the United States and Russia to stabilize oil prices.
2. Under the epidemic situation, although countries have taken measures such as stopping work, closing business, martial law and isolation to prevent the epidemic situation, it has reduced the total oil demand of economic life. However, residents' life and basic commercial and economic activities also need energy, including petroleum energy, and the quantity is not small. In this way, on the one hand, oil-producing countries have to stop production because of the epidemic, and all parties in the international market have to make plans for the future and import more oil.
3. Some time ago, Saudi Arabia and Russia launched an oil price war, which caused the international oil price to plummet. The plummeting price under the price war will be revised in the market.
The current rise in oil prices is the correction of the plunging oil prices by the market and returns to reality; It is also the current market feedback that international oil demanders reduce oil production under the epidemic situation, communicate with oil exporting countries to stabilize oil prices and reduce production. At present, the rise in international oil prices proves not the economic recovery, but that the epidemic has affected the anti-epidemic shutdown and market closure of oil-producing countries.
At present, the "staged" rise of crude oil does not mean that the economy has recovered. At present, the global economy is in the shadow of the epidemic, and it will usher in a dark moment, the dawn after the dark moment, that is, the turning point when the epidemic is effectively controlled and the world production order and trade order are effectively restored, which means that the economy will enter the track of recovery. Unfortunately, it hasn't arrived yet.
At present, the staged rise of crude oil is completely stimulated by the good news on the supply side. However, the market believes that Saudi Arabia, Russia and the United States can no longer bear the negative impact of the current low oil prices, and will stop the current disorderly increase in production and enter substantive negotiations on production reduction agreements. All oil prices have risen accordingly, which is also a revision of the previous oversold expectations. The rise in oil prices has little to do with the demand side. Under the influence of the epidemic, the economic situation in many countries around the world has gone from bad to worse, and the demand and capacity for oil consumption have been further reduced. Obviously, the demand side situation is bearish oil prices.
We believe that only the increase in oil consumption demand means that the economy shows signs of recovery to a certain extent, and the retaliatory rise in oil prices caused by the current production reduction expectations does not mean economic recovery.
So, let's think about two questions. Will oil prices continue to rise? If the OPEC+meeting on April 9 is successfully reached, the author predicts that the oil price will continue to rise to $35, but it is unlikely to continue to rise, and it will be sorted out sideways around $35. If in June-August, the global epidemic will usher in an inflection point, and economic activities and resumption of production and work are in good condition, then oil prices will further establish an upward track and will return to the normal price range of 50 to 60 dollars by the end of the year.
Will the economy recover? When will it be restored? With the improvement of the demand side of oil prices, when the epidemic comes to an inflection point, the economic situation will gradually stabilize. If countries can cooperate with effective and accurate monetary and fiscal policies, the global economy will reverse the recession and enter the recovery track. However, the initial stage and process of recovery will be longer, and the impact and adverse effects caused by the epidemic in 2020 will not be digested until 202 1 even 2022.
We must have confidence in the future economic situation, and more importantly, we must have confidence in the global victory over the epidemic. Although there is great downward pressure at present, we will not enter the economic crisis.