Will oil price soar in 2013?

Next year’s oil price will be about $100 on average but if the situation in the Middle East explodes oil could hit the level of $200, experts say.

For the whole of 2012 oil prices remained within a comfortable range for the global economy, without any serious ups or downs. Experts point out that moderate fluctuations satisfy everyone. Analyst Vitaly Krukov from IFD Kapital Group expects the average oil price to remain on the level of 2012.

“The oil price is expected to remain at the level of $100. I don’t believe that price fluctuations will be considerable because geopolitical factors have had a marked influence in recent months and next year is unlikely to bring any change in this respect.”

However, this scenario will not work if the situation in the Middle East gets out of hand. Expert Denis Borisov from Nomos Bank is convinced that in this case the oil price could hit all records.

“The US election is over and now the Iranian issue could top the agenda again. If the worst comes to the worst the rates could become unpredictable and the price could skyrocket to $200.”

Experts traditionally name the geopolitical situation as the determining non-economic factor for the oil price. Another significant issue will be the investment activity in the field of oil and gas production in various regions of the world. First of all, we mean the growth of production in the US, IFD Kapital Group expert Vitaly Krukov says.

“It is mainly projects in extracting shale oil, they will have a strong effect on a long-term basis. At present I don’t expects them to have any noticeable effect on the oil price in 2013. The current trend is that the US is lowering oil imports and increasing domestic production. At the same time, this trend will be offset by irregular oil deliveries from hot spots.”

Shale projects in Europe looked less attractive from the very outset due to difficult land relations. In addition, the population density in Europe is high and shale oil extraction requires a lot of wells. ExxonMobil’s cancellation of projects in Poland became a convincing signal that shale projects would have no mass character in Europe.”

Meanwhile, Russian companies are increasing their influence on the global oil and gas market. In particular, Rosneft, which will close up the deal on buying TNK-BP assets in 2013, will become the world-largest company in volumes of proven reserves and daily production. Analysts believe that the company will further consolidate its position when it begins work on the shelf, which is only an issue of a very short time, experts say, because Rosneft is holding all trump cards.