Zurich Europe is groaning under the high energy prices – and no relief is to be expected from the gas markets: natural gas continued to rise in price on Monday. According to data from the European Energy Exchange EEX, the gas price climbed to over 90 euros per megawatt hour.
And so the last hopes of the economies dependent on energy imports rest on the Organization of Petroleum Exporting Countries (OPEC): The OPEC member states are currently negotiating how much they will increase oil production from November. It would be an important signal of relaxation. But there are now increasing doubts as to whether the expanded Opec-plus alliance to include Saudi Arabia and Russia is actually able to curb the oil price rally.
At the beginning of the week, Brent oil cost around $ 79 a barrel – the price was thus close to its three-year high from the beginning of last week. Gas and oil markets are even more closely related these days than they are anyway.
In Asia in particular, the shortage of gas is causing electricity suppliers to switch to heating oil in their electricity production. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says: “In view of the sharp rise in natural gas and electricity prices, it is worthwhile for power plant operators to use crude oil to produce electricity.”
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Inventories for natural gas are relatively low and prices are high, so the high price of natural gas is carried over to the price of oil. Older natural gas power plants in particular could also be operated with heating oil or diesel. “The prices for all fossil fuels are currently rising, and this will also be reflected in electricity prices,” warns de la Rubia.
In view of the strained supply situation, many analysts have revised their oil price forecasts upwards at short notice. Bank of America (Bofa) warns: “A cold winter could drive the price of Brent oil over $ 100 per barrel and diesel over $ 120 per barrel.”
De la Rubia also believes that short-term price peaks of $ 100 per barrel are possible. The Bofa analysts are therefore drafting a dangerous scenario: “Oil prices can soar and build up further inflationary pressure. We could be just a storm away from a new macroeconomic hurricane. “
The sheikh sees himself as the central banker of the oil markets.
(Photo: AP)
The Saudi oil minister, Prince Abdulaziz bin Salman, has the most powerful antidote in his hand: the sheikh, who sees himself as the central banker of the oil markets, could single-handedly increase oil production so much that the supply situation eases. The Saudi oil minister is known for surprising negotiation results at the OPEC meetings. So far, however, there is little to suggest that bin Salman is doing this favor to the global economy:
OPEC promises stable oil markets
For the time being, the alliance of the 13 OPEC states and the ten countries of the expanded OPEC plus alliance intends to increase oil production by 400,000 barrels per day every month until December. According to analysts, however, that is by no means sufficient to meet the increased demand for oil. “If Opec plus” does not hold out the prospect of a significantly higher offer, oil prices are likely to rise further, “warns Commerzbank analyst Carsten Fritsch.
The experts at Bank of America calculate that simply replacing gas with oil in electricity production could raise demand worldwide by one to two million barrels per day. A cold winter in Europe could generate another half a million barrels a day of demand. And additional air traffic due to the easing of the US entry regulations from November will further fuel demand.
Analysts such as Amrita Sen from analyst firm Energy Aspects, says: “Saudi Arabia is very careful to reduce the volatility of oil prices, both upwards and downwards.” Should oil prices suddenly rise, the kingdom could react quickly. But it doesn’t look like that for the time being. In addition: In view of the rapidly increasing oil prices, the Saudi royal family is expecting a balanced budget for the first time in years.
In addition, doubts are growing about the ability of other Opec-plus members to increase oil production in the short term. For example, Helima Croft, Opec expert at the investment bank RBC Capital Markets, points to the stagnating production figures in Russia. The country is actually considered a proponent of higher funding rates.
But although the currently valid Opec-plus deal granted the country higher production, Russia has barely expanded oil production in the past few months. Many oil fields in Russia are considered obsolete and difficult to restart once production has stopped.
“Nigeria, Angola and Libya are also facing major challenges,” says Croft. And the talks with Iran about a new nuclear deal are also at a dead end, so that a return of the country to the international oil market is not in sight in the short term.
It is possible that the OPEC countries choose a more subtle way of increasing the oil supply: They could simply produce more than the negotiated production quotas allow, says economist de la Rubia: “Especially with the OPEC partner countries under the leadership of Russia this is a probable scenario. ”But accepting low production quotas and hoping that OPEC does not stick to its own deal is unlikely to be satisfactory for most of the oil-importing countries.
More: Europe’s dependence on OPEC is fatal.