After oil prices shot up as a result of Libyan events within February-March of the current year, it became obvious that geopolitical factors started influencing the oil market again. Their present influence has slightly weakened, but still the potential instability in oil-producing countries may have an impact on the prices in the near future.
At the same time experts claim that in a long-term perspective the leading role will again be given to the familiar macroeconomic factors. And oil price is unlikely to drop to less than $100 per barrel according to RBC daily.
During this year the oil market was exposed to the influence of a number of global events. Two factors influenced the market in March – disturbances in Libya and the earthquake in Japan, which were pulling prices in different directions. Nowadays these factors don’t affect prices any more, although some events in other regions may have an impact on the oil market soon.
Geopolitical factor made itself known in January when disturbances in Egypt made the oil price rise up to $100 per barrel for the first time after the crisis. Investors felt concerned about the instable situation in the region which could not only provoke a chain reaction in other countries of the Middle East, but also affect the delivery of raw materials through the Suez Canal. The fears proved to be reasonable in February when geopolitical factor went into the gear: the events in the Middle East became of the utmost importance (mass demonstrations in Libya, in particular) which made oil prices go higher and higher.
Anatoliy Dmitrievsky, the manager of the institute of oil and gas problems RAS, believes that instability can be expected not only from the Middle East countries nowadays, “oil prices can be influenced by the events in North Africa and Latin America, by Colombia in particular” – states the expert.
In case global shocks step aside, oil prices will again be determined by macroeconomics. Valeriy Nesterov, the analyst from investment company “Troika Dialog” claims that the leading role will be given to the oil demand dynamics.
One shouldn’t forget about speculative factors. Artiom Konchin, analyst from UniCredit Securities, suggests that oil prices will be regulated by financial streams. “Investors don’t want to risk nowadays, that is way we face the outflow of funds. But the situation may change.”
Konstantin Cherepanov, a spokesman of UBS, adds that risks of inflation are high. That is why FRS USA and European Central Bank are expected to raise key rates which will control the oil market and the prices will drop. Though there is little confidence that oil price will be lower than $100 per barrel.