Russian market has been resistant to geopolitical conflicts
Due to political disputes in the Middle East, indices on the largest exchange platforms in Europe, Asia and the United States has dropped. On January 5, Brent crude oil went up to $70.23 per barrel for the first time during six years; on January 6, the price fell to $69.51 per barrel.
Most analysts working with Forbes say there is a chance that oil will increase in price. Alexander Losev, General Director of Sputnik – Money Management company, gives a disappointing forecast: a barrel of oil will cost $70-75. Predictions of portfolio manager of Alfa Capital Management Company Eduard Harin are less ambitious; his forecast is $73-75.
Both analysts rely in their predictions on the subsequent intensification of relations between the United States and the Middle East. Losev suggested that states were neither physically nor mentally prepared to aggravate the conflict and start a war, and therefore there could be no question of stopping the production and supply of petroleum products. The only thing that can affect oil price is the implementation of targeted covert operations on both sides of the conflict.
According to Losev, tensions in geopolitics will not only lead to an increase in prices in the future. In many countries, there is a decrease in the supply of petroleum products. The boost in quotes will be affected by OPEC+ deal, a decrease in the production of shale products in the United States and significant oil consumption in China and India.
Michael Pearce from Capital Economics claims that oil will only rise in price if there are direct threats to Iran’s oil production from Saudi Arabia. A similar situation occurred in 2019. There is a risk that Iran will try to block one of the main ways of transporting oil – the Strait of Hormuz, through which 20% of global supplies pass.
Goldman Sachs analysts are confident that the price surge will not be long, to maintain a high cost, the threat of stopping production or supply is necessary. If this doesn’t happen, prices will be settled soon.
Despite the hysteria of the world market, the index in Russia rose on the day of the assassination of General Suleimani. The exchange index hiked due to the rise in securities prices of oil companies. Oil costs are returning to their previous level along with other trading platforms. On January 6, shares of Lukoil, Tatneft and others are bidding with slight increase. In general, the indices went down a little to negative points. Panic abroad stealthily begins to influence the Russian market.
The ruble at the auction is slightly more expensive than 62 per dollar. Subsequent changes will be adjusted by situation turn in geopolitics and the desire of foreign investors to purchase federal loan bonds.
At the moment, the Russian market doesn’t have a large number of investors, but their influx should be expected at the end of trading after the holidays. Strengthening of the ruble and oil companies is expected these days.