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Energy Out of Bounds
The gradually easing mini-crisis on world financial markets has shown the degree to which the price of oil, Russia's main export, depends on the world economy. The oil market, as was seen during the week of August 6-10, is extremely closely tied to the crises that were mainly phenomena of financial and stock markets. The significant threats to those markets were compensated for by lowering oil princes. The price of Brent dropped 8 percent in a week. Yesterday, when it became fully clear that there will no catastrophes on the financial market, quotations on oil picked up steadily. On the ICE futures trading system, September Brent gained $1 in the first hour and reached $71.63 per barrel.
It is not hard to explain the price behavior of oil. The threat of a crisis on the financial markets rapidly transformed into the threat of a slowdown of economic growth in the largest economies and a shortening of the gap between demand and supply for energy sources. The International Energy Agency announced on Thursday in its review of the possible correction of indicators of oil demand in the United States. That was the same day the U.S. Federal Reserve Board and European Central Bank began interventions on the financial market, which shows the seriousness of the problem. According to The Wall Street Journal, yesterday the IEA warned of the growth of oil deliveries in the autumn of this year to avoid a crisis on the financial market.
Oil and energy sources are often seen by political scientists as “energy weapons.” It was demonstrated last week, however, how ineffective a weapon they are, even in principle. The threat of interruptions in energy supplies immediately turns into a prognosis for slower growth in the world economy. OPEC, like Russia, makes money on its growth and is not likely to make money from a crisis, at least not from oil.
www.kommersant.com
All the Article in Russian as of Aug. 14, 2007
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