Today, after the announcement of an agreement on an unprecedented reduction in the production of “black gold” by all of its significant exporters, commentators of this event distinctly divided into three categories. The first can be attributed to those who sincerely rejoice that the countries that came together on the eve of a fierce confrontation managed to come to at least some kind of compromise and thereby at least halt the fall in world energy prices. The second is mainly representatives of the expert community, who believe that optimism is inappropriate here, or at least premature. The deal is good, but it is unlikely to be able to seriously affect something.
Well, and finally, the third group is those who see in everything that’s happening not a unique chance to stop the destructive processes in the global hydrocarbon market, which threatened to completely bring it down, and then the whole world, which is desperately balancing over the abyss today the economy, but exclusively “defeat”, “rout”, “shame” and so on. Moreover, they attribute all these extremely unflattering definitions and epithets to just one country. That is - Russia. Alas, there are plenty of supporters of this view of things in our Fatherland.
The funny thing is that the vice president of PJSC LUKOIL Leonid Fedun, who draws parallels between the new OPEC + deal and Brest Peace, either simply doesn’t understand the history too well, or expresses himself so floridly that his words are quoted with pleasure, reinterpreted in their own way, the obvious enemies of our country. But meanwhile, if the current agreement to reduce oil production in the long term leads to the same results as the document signed 102 years ago on the withdrawal of our country from the First World War, it would be very good! Why? I will try to justify my point of view.
"The obscene world" or the death of the country
In order to understand whether Mr. Fedun has given the Russian negotiators who have concluded the current oil deal a tasty moral "slap in the face", or has given them a very flattering compliment, it is necessary, first of all, to remember what exactly the representatives of Soviet Russia signed their autographs under in Brest-Litovsk on March 3, 1918. At the same time, I immediately propose to agree - schizophrenic versions like the one that in this way "Lenin and the Bolsheviks worked off the money of the Kaiser's General Staff received for the revolution and travel in the famous sealed carriage", we will not consider. This is for psychiatrists and pseudo-historians. Let's talk about the real prerequisites and results of the agreement. Let's start with the first. Yes, the leader of the world proletariat personally called the "Brest-Litovsk Peace" nothing but "obscene". Nevertheless, the main thing in this case is not emotions and a clear answer to the question: "Could our country, in the established at the beginning of 1918, continue military operations against Germany, Austria-Hungary and Turkey?" The answer is clear: no. No, again no, and absolutely no. The army no longer existed as such. With allegations that it was "corrupted by the Bolsheviks," I again address the medical specialists of the above profile. Long ago, it was documented that the Provisional Government coped with this task (as well as the launch of processes for the territorial collapse of the Empire) in an excellent way. In fact, the German troops, perfectly armed, equipped and retained at that time iron discipline, stood on the threshold of Petrograd, which there was no one to physically defend. The alternative to the "obscene" peace was the complete destruction of the country, the loss of statehood, the death of Russia. No other options other than sore brains political opponents of Lenin and the company did not exist.
Yes, humiliation was burning, shame immeasurable, territorial and material losses - colossal. But there is, in the end, a difference - to lose a lot or lose everything ?! I will not go into relishing all the terrifying disadvantages for our country of the "Brest Peace", I will allow myself to proceed immediately to somewhat more distant prospects. This "abomination" lasted only until November of the same 1918. After that, in the fire of their own revolutions, all three empires perished, that in Brest-Litovsk they enjoyed their “victory” - the German, the Austro-Hungarian, and the Ottoman to the heap. Half of the promised indemnities was not paid, but German comrades from the Ukrainian, Belarusian and Russian territories that were seized didn’t have time to properly squash the bread on our bread, lard and bulbs, quickly sank the Nakhter Vaterland and sign much more shameful and the horrific Versailles agreement. Well, perhaps the Poles were pissed off by picking up something from the "ownerless" to their grabbing hands, but they also did not have much time to rejoice - exactly until 1939, when we all returned it. The main thing is that the story with the Brest Peace did not end in 1918, but on May 9, 1945, on the ruins of the Reichstag. Finally, the point in the case of the “obscene” world, signed at the request of Lenin, who turned out to be much more perspicacious, was put by his faithful comrade-in-arms Stalin, who once and for all very specifically explained to Europe all about territorial and other claims to our Motherland. Why all this historical digression, you ask? And besides, the Brest Peace ultimately turned out to be in Russia's favor, thanks to which it saved itself from destruction and gained time to prepare for revenge. But the current conditions, alas, painfully resemble the very critical situation of a hundred years ago - what is there to hide. Well, with the story finished, let us now turn, in fact, to the economy.
"The obscene OPEC +" or the collapse of the economy?
The agreement now concluded to reduce OPEC + oil production by 9.7 million barrels per day will require our country to reduce the activity at its drilling facilities by 22.7%, pumping 2.5 million barrels less per day. Is it a shame? To the horror! Unprofitable? Not the right word ... However, to agree with Bloomberg, which, excuse me for the expression, itches without blushing that the agreement is “disastrous for Russia” and represents its “painful failure”, is also impossible. As well as not arguing with those who have already erected a whole myth that "Sechin is to blame for everything, who in March did not agree to an agreement of 0.5 million barrels per day." But how much can you try to put the cart in front of the horse and issue an investigation as a cause! Is it really not clear that the extension of the previous deal to reduce production (with its expansion) would have absolutely nothing saved and corrected! Prices would not have fallen ?! Collapsed, how cute! The main “killer” of oil demand, which has generated not only monstrous dumping, but also the physical overflow of black gold storage tanks around the world, is not the expansion of “revengeful Arab guys”, but the coronavirus epidemic. Already, serious people in oil-producing countries recognize that they will have to “tighten the tap” not by 10, but by all 15, or even 20 million barrels per day! But ... The worst thing - and this, too, may be completely insufficient. Alas, Bank of America analysts predict that the fall in demand for “black gold” may not be the expected 16-17%, but all 30-40%. Their counterparts at Goldman Sachs are somewhat more “optimistic” - they talk about a 19% decrease in consumption in April-May, but they nevertheless claim that no reduction in production will close this gap in the markets and will not stop the fall in prices.
Yes, if Russia had agreed to cut as much as necessary in March, this topic would have arisen again today! The current agreement is not an "end to the oil war." Not the finale of the economic tragedy called “the fall of“ black gold ”, but only its next act. Or an intermission in it - as you like it more. Those exporters who will come to another near end of the global COVID-19 pandemic with the least “sagging” economies and the saved potential of their own oil industry will set their own rules in the markets, fight for a place on them and dictate pricing policy. Today, Russia's position in the fight against the virus is much better than that of the United States. What will happen in a month or six months? I do not know! And nobody knows. However, one thing is clear - the challenge now is to survive. Both in a purely physical and economic sense. And as for the assurances that sound from time to time that "the United States was the biggest winner" and that "it was not possible to squeeze out shale oil" ... How to object to them, and at the same time to the very smart Bloomberg, who made Russia the only loser? Here, perhaps, only the American argumentation will do - otherwise they will immediately write it down in the “voices of the Kremlin” once again. Well, well, if you please: according to the US Energy Information Administration (EIA), oil production in the United States this year could decrease by 0,5 million barrels per day, and in 2021 - by another 0,7 million barrels per day. Here's another calculation: The Kansas City Fed estimates that if the price of WTI crude averages $ 30 a barrel, roughly 40% of the state's oil and gas companies will be insolvent within the next 12 months. Standard Chartered predicts a decrease in oil production in the United States by 4 million barrels per day by the end of 2021 at this price of "black gold". Well, and finally, the main thing - according to the estimates of the same EIA, the United States will return to becoming a net importer of oil and oil products in the third quarter of this year, and will remain in this status until at least 2021! Here it is - a long-term perspective ... I am not saying that this data is the ultimate truth, and that it is necessary to pray for it - but this, I emphasize, is the data of American industry experts and analysts. Maybe they know better?
Otherwise, you can even get to the level of "sources" like a certain Oleg Belokolos from the "unfathomable", enthusiastically broadcasting that "the Kremlin lost the oil war to the West." The head of the board of the "Maidan of Foreign Affairs", by the way. He begins his fantasies by re-singing all the same ideas about “Russia's destruction of its reputation and budget” and “US invincibility”, and it ends in general enchantingly. It turns out that the final kirdyk of the "gas station country" he hates will inevitably come, even if oil prices soar again! This is how, by 2050 (!) The year “more than 50% of the world automobile transport” will switch to electric traction, and “all industrialized countries” - to renewable energy sources, this will happen. And then Russia "will have no money left for military programs, propaganda and the" fifth column "in different countries." The next stage of the Napoleonic dreams of Mr. Belokolos is, obviously, a yellow-black flag over the Kremlin ... I will not comment on it due to sheer delirium - both the conclusions and, most importantly, the prerequisites for them. I can only say that the current OPEC + agreement can indeed become for Russia something like an economic “Brest Peace”. We’ll survive the insult. Losses will be compensated. The main thing is to withstand and wisely use the time gained as a result of his conclusion. To prevent the collapse of the ruble, the collapse of the economy, the collapse of the oil industry. Stay in the markets, defeat the pandemic. And then we'll see who lost.