Chinese oil will have little impact on the global market, says a leading expert of National Energy Security Fund, Lecturer of the Financial University under the Government of the Russian Federation Stanislav Mitrahovich.
Chinese oil will not collapse the oil market
Bloomberg news agency reports, that China's actions in the oil market will lead to a collapse in world prices. China took advantage of the spring collapse in oil prices and bought large volumes of cheap oil.
At the same time, how the OPEC + countries expressed their desire to start a gradual return to pre-quarantined production volumes, in China, they began to sell the volumes of the so-called cheap oil purchased in the spring.
Chinese companies sold 1 million barrels to buyers, who used to buy energy in the Middle East and Africa, but this is a large volume for a one-time transaction, and judging by the global scale, even "a drop in the ocean".
During the pre-quarantine period, the world consumed daily 100 million barrels of oil, and if we take the strategic reserves of the United States, then there the account goes to hundreds of million barrels, which are filled to the limit. In such a situation, this Chinese deal cannot have a noticeable impact..
“China really bought a lot of oil, when it was cheap in spring 2020 of the year. Therefore, it is possible, that some Chinese companies can resell this oil, but in any case the oil surplus, arising in the "coronacrisis", had to go somewhere, so we have a predictable situation ", – states Mitrakhovich.
No point in blaming China, especially since this country has played a good deed, when I bought the oil, for which there was no demand. This allowed the market to stabilize then, when the new version of the OPEC + agreement has not yet begun to work.
“Today China will throw some volumes on the market, and this oil can affect prices, but this is not important, and what will happen next with the demand and supply of oil. The Chinese are going to throw away no more 1 million barrels per day. They can play on the mood of oil speculators at the moment, but nothing more ", – concludes Mitrakhovich.
Speculators will take advantage of this news, to play on the decline in oil prices, but, At first, they always do this in their actions, and secondly, this is not the main factor in the problems of modern oil pricing.
“It will not affect global perspectives. Here they sold 1 million barrels of oil, and then what? China needs oil reserves itself, that's why Beijing won't sell all of them ", – summarizes Mitrakhovich.
China is doing this to support the yuan and to demonstrate its ability to influence the oil market., including pricing.
This is important for China, since, along with the United States, it is the leading oil consumer in the world - the first problems in the market with prices appeared after the decrease in domestic consumption in the PRC as a result of the infection in Wuhan, but the influence of the Chinese on the development of the oil market as a whole is much less, than Americans.
“Before us is a local event, which Bloomberg drew attention to, but other things are the main factors, not Chinese stocks. What will happen to the coronavirus, what will happen to the OPEC + deal and what the situation will be in the United States ", – states Mitrakhovich.
USA bogged down in economic problems
The IMF gave information on the American economy, predicting its decline by 6,6% at 2020 year and growth by 3,9% at 2021 year. This IMF forecast repeats previous estimates of the possible losses of the main world economy due to the "coronacrisis".
Associate Professor at the Financial University under the Government of the Russian Federation Gevorg Mirzayan claims, that the US economy is far from overcoming the "coronacrisis".
“We cannot talk about any way out of the crisis yet.. The situation with the coronavirus is not very clear. We see a sharp rise in the number of cases in the United States, we see internal problems in the USA, we see the continuation of "shiza" Black Lives Matter, which does not end and it is not clear what will result in ", – concludes Mirzayan.
In such a difficult situation, it is premature to calculate the economic damage to the American economy..
“Therefore, it makes no sense to make forecasts for the fall of American GDP, but we need to wait for the development of the situation ", – summarizes Mirzayan.
The US political administration takes into account the factor of economic problems in its foreign policy. This is the pressure on China, which can be explained, as an attempt to write off their problems due to the "coronavirus" in the PRC, and other odious things, including sanctions against Turkey under the S-400 contract.
After economic turmoil, associated with rising unemployment and falling economic activity in the United States, sank the rating of President Trump. Prior to that, low unemployment and stable economic growth were the main trump card of the White House..
In such a situation, the USA can play an external card, like writing off the problems of the oil market to China's trade deals.
"First of all, much will depend on, what will be American internal problems. Secondly, it just so happens, that most options for stepping up Washington's foreign policy are fraught with increased costs. Like wars and stuff like that, and today there are no signs of these steps ", – states Mirzayan.
Dmitry Sikorski
