Stabilizing energy markets require depoliticized solutions: Diplomat

By Al Mayadeen English
Source: Agencies
17 Apr 2023 08:27

The Russian diplomat says the oil market must create 'anti-crisis solutions' to always be ready to deal with emerging surprising events.

Model of oil barrels seen in front of a rising stock graph in this illustration, July 24, 2022 (Reuters)

Several factors are expected to impact the oil market in 2023 due to "man-made turbulence" such as anti-Moscow sanctions and the bank crashes that created the base conditions today for an unhealthy oil market, Ambassador-at-Large of the Russian Foreign Ministry Yury Sentyurin told Sputnik on Monday.

"In the conditions of man-made turbulence, it is expected that market dynamics in the short term - until the end of 2023 - will be affected by such factors as the growth rate of demand from the largest consumers (China and India), a possible consumption decrease due to the consequences of financial and banking crises and ‘the discipline of observing anti-Russian restrictions," Sentyurin said.

The diplomat stressed the need to establish new "anti-crisis solutions" and tools to be prepared to deal with modern challenges affecting the global energy market after the previous dynamics have "degraded".

The West's decision to impose a price cap on Russian oil and create a "buyers' market" have "an equally destructive impact on both the oil market and the gas market," Sentyurin added.

"In the current situation of the obvious degradation of many previous models and development tools, it is necessary to promptly develop a package of anti-crisis solutions that would be based on pragmatic tasks and be outside of politics. Unfortunately, we have to state the reverse dynamics and the absence of prerequisites for the normalization of the state of the markets in the near future."

According to Sentyurin, the global energy industry is suffering from irresponsible politicized decisions, including in what concerns the price ceilings, and the situation risks developing into a crisis.

"Last year, economic relations were artificially made dependent on geopolitics through irresponsible politically motivated decisions, the use of essentially anti-market mechanisms and restrictions, and the language of ultimatums," he said, adding \that, as a result, the state of global energy is currently characterized as difficult, with the risk of developing into a crisis.

Sentyurin emphasized that "the endless manipulations around the oil price ceiling are obviously destructive" and have a negative impact on the investment climate, while the recent OPEC+ oil production cuts are "pre-emptive measures aimed at balancing supply and demand, preventing a collapse in prices for ‘black gold’ and market destabilization."

Last month, during a conference at CERAWeek on Monday, Chevron CEO Mike Wirth said that the Russian price cap has generated an excessive amount of obstacles in standard operations for global energy markets.

"There's not a lot of swing capacity, there's not a lot of inventory capacity, so a little bit and the system normally optimizes within those parameters, but there's now a lot of constraints: you can't sell to this country, you can't buy from that country, can't insure," Wirth said.