Interview with the Director of Showa Shell Sekiyu K. K. Tsuyoshi, Kameoka: prospects for oil prices

Oil prices have a major impact on the global economy, hovering near $ 50 per barrel. We talked with the Director of Showa Shell Sekiyu K. K., Kameoka Tsuyoshi (Tsuyoshi Kameoka) about the prospects of oil prices and the cooperation of oil producing countries to reduce production.

Tomio, Sid: At the beginning of last year, prices fell to $ 20. One time they grew more than twice.

Tsuyoshi, Kameoka: From 2011 for three years and a half of oil to maintain high prices at 100 dollars. At the end of 2014, there have been significant changes. The fact that the increasing production of shale oil in North America, the refusal of OPEC to cut production and increase of Iranian oil, the balance between supply and demand has changed. Unlike the financial crisis of 2008, the collapse in oil prices this time was caused by this. If the balance of supply and demand is restored, prices will return to previous levels. Shale companies have to cut production because of falling profits. Russia and OPEC agreed to production cuts. Until last year, the supply of oil was excessive, and this year it is not enough.

After 1980-ies of the OPEC agreement on production cuts was often violated.

— According to the International energy Agency, in January, 90% of the countries comply with the Treaty on the reduction of production. The fact that all countries were on the verge of financial crisis due to the collapse in oil prices. According to IMF forecasts, in order to balance the fiscal balance, Saudi Arabia requires that oil cost $ 80, Qatar — $ 60. Russia also has serious concerns. The probability that an agreement on production cuts will last longer than the market forecasts.

Growth will continue?

— Thanks to the recovery of the global economy, the center of which are the USA, demand is also growing. We can assume that oil prices will continue to rise. Nevertheless, in the recent shale oil inhibits the growth. Because extraction will increase dramatically if the price exceeds $ 60, this level can be an obstacle. Chances are that next year prices will exceed the 60-dollar level.

Also concerned about the administration’s policies trump.

— Administration’s policies trump will be reflected on the increase and the decline in oil prices. Geopolitical risks diplomacy towards Israel and Iran, as well as measures to stimulate the economy could have a positive impact on the us economy, which in turn will cause rising oil prices. Conversely, the recent strengthening of the dollar and energy development, caused by the weakening of environmental restrictions, can cause a drop in oil prices.

Experts on the oil market believe that the spread of electric vehicles and natural energy sources will reduce demand.

— I have no doubt that in the future where the demand for oil will start to fall. Even if the US pulls out of the Paris agreement, the global trend on concern about the environment, will not change. However, in developing countries becomes more and more petrol and diesel cars. Barring a sharp slowdown in the world economy, demand for oil will grow.

Japan, where demand is declining, will continue to supply oil from the oil-producing countries?

— It is necessary to strengthen ties with Russia and countries in South America, not just the Middle East. Thus, even if the demand will decline, the middle Eastern countries who consider Japan an important consumer will not change his attitude towards her. The main proof is that Saudi Arabia and the UAE to store crude oil in Japan.