What do we expect to come out of Russia? Well, you mentioned Russian official
Minister Novak said that Russian out with my cut by about 500 to 700 thousand
barrels per day early next year because of the country stop selling oil to those
countries that are going to implement a price cap on Russian oil export.
Well, if that happens, let's assume it's five hundred seven hundred thousand
barrels a day that Russia cuts back production of what will the effect be on
the price of oil? Well, if it's really 500 to 700 thousand
barrels per day, it's not going to be a significant huge impact on the prices
because of different reasons. First of all, we're expecting lower,
lower economic growth next year and possibly slowdown or recession, which
results to lower demand. Also, OK, countries could substitute
that amount if they are willing to decide to do that.
But still, the market was expecting something between 1 million to 2 million
barrels per day. Five hundred to seven hundred thousand
barrels wouldn't have that huge impact on the market.
Sir, you also mentioned the possible effects on the price of oil.
Just overall economic activity. Let's talk about China specifically,
because China, on the one hand, is coming out from the zero Covid, which
might indicate that they will have a greater demand for oil.
And they have a lot of people getting infected over there with Covid.
What possible or likely effect do you see on the price of oil from what's
going on in China right now? Well, if you want to look at the
uncertainties in 2023, that one of the major uncertainties for markets
fundamentals on a demand side is China. Covid policy and how fast China's
economy and also consumers are going to go back to normal consumption of energy.
And that's something that no one knows and is going to have a huge impact.
If we were going to have suddenly a significant ease on Chinese coal with
policy and we have a decrease in Chinese economy and economic activity.
But again, that's something that we do not know.
But as we saw in 2022, the Chinese Covid restriction policy had had a huge impact
on demand. It basically prevented for demand to
increase further. So you mentioned that China is one of
the major elements of uncertainty and oil going into next year.
So you let us there. What are the other major uncertainties
about oil as we look at 2023? On the demand side, economic slowdown
and how much the recession or slowdown of economy is going to have impact on
industrial consumptions and also consumption in general, but on the
supply side, obviously Russia remains the main question how much Russian oil
would be and also gas supply to the market.
How would the sanctions and restrictions on Russian insuring insurance and also
logistics of transportation of Russian car was going to impact on the market?
Also, Iranian nuclear deal. As of now, it's feels like it's somehow
it has been dead. But we've seen that last month.
Iranian oil exports increased from around seven hundred eight hundred
thousand barrels to about one point one million barrels per day.
So there are some uncertainties both on the supply and demand side.
The other important thing is also crude oil versus refined petroleum products
capacity, because Russian oil might cut by, let's say, five hundred thousand
barrels per day. Oil prices might not move significantly
less day, stay around the range of 70 to 100 dollars per barrel.
But refinery capacity is very important. And we know that, for instance, Russia
is a major exporter of diesel and refined petroleum products to Europe and
around the world. And with the global refining capacity be
able to substitute the shortages from Russia and also global shortages in
United States, we have less refining capacity as we had before Covid.
So I think that's also a nuance that we have to keep in mind.
Refinery capacity and refined petroleum products.
Prices versus crude oil production and prices.