End of an era of cheap oil


Estimated IEA, OPEC was producing in July 29.1 million barrels of oil a day, including 2 million barrels a day in Iraq. 10 OPEC countries to an agreement on quotas, ie not including Iraq, were caught in July of 27.1 million barrels a day, against the quota of 25.5 million set by July 1. Stocks of crude oil and oil products in OECD countries increased in June (the last month for which data are available) to 16 million barrels to 2,534 million barrels. IEA indicated that increasing oil production by OPEC in recent months has reduced the reserve capacity of the cartel to a very low value. In July resistant OPEC spare capacity fell to 600 thousand barrels per day.

This represents less than 1% of world oil consumption is very small margin. For comparison, in 2002, sustained OPEC spare capacity reached 7.6 million barrels per day, or about 8% of world consumption. Additional, unstable OPEC spare capacity could reach even now 1.5-2 million barrels per day. Estimated IEA, spare production capacity will increase by the cartel 370 thousand barrels per day in 2004 and 680 thousand barrels in 2005, this will be due to increasing capacity in Kuwait, Nigeria, Algeria and Libya.

"Low spare capacity available to OPEC, have contributed to higher oil prices in recent years", - said the International Energy Agency in the August report. They increase the risk deficit in the oil market in the event of a major supply disruption of oil from a particular country. And the risks of supply disruptions are present in large numbers.

However, IEA has expressed doubts about the validity of the current level of oil prices, said in a report the following "The market is tense, production and infrastructure capacity is poor, and uncertainty continues to hang over the market. But Does this justify the price of oil at $ 45 Current prices are a concern and cause economic damage.

Yukos exports more oil than the same time last year and earlier this year. Oil supply outstrips demand. Saudi Arabia can increase oil production in the short term. However, despite this, the oil futures market sentiment suggests that oil prices will not fall significantly in the short term. "... The current mood of the market tends to expect that prices will remain high in the winter and next year - said the International Energy Agency. - It is important to note, however, that the mood of fickle and can change quickly depending on new developments "

Concerns about growth

The rampant growth of oil prices is causing more concerns about the possible negative impact on the growth rate of the U.S. economy in particular and the world economy as a whole. So, published in the August report of the Ministry of Commerce said the slowdown in GDP growth, and the main reason has been called the high cost of energy has a negative effect on the level of consumer spending.

According to the Ministry, the growth rate of GDP in the II quarter were 3% year on year, they fell not only in comparison with the previous quarter, but was below the median forecast of economists - 3.7%. The revised figure for the quarter I was raised to 4.5. The rate of growth in consumer spending have been minimal over the past three years. Consumer spending, which accounts for 70% of U.S. GDP, increased by 1% year on year, while economists expected an increase of 2%. However, according to a member of the Board of Governors of the Federal Reserve Edward Gramlich, the impact of the current high oil prices on the economy is not critical, they will not have such a strong influence, as "oil shocks" of the 1970s and 1980s., But "definitely will be felt ".