The BRICS nations hold both sides of the equation: production and demand. The key issue is whether we’ll see a shift away from the US dollar for trade settlements. A move away from the dollar could significantly affect global trade mechanisms and the US economy. The US needs a weaker dollar yet also depends on dollar liquidity to finance its government debt. Additionally, with vast amounts of energy still underground in BRICS nations, producers may be eager to extract and sell it soon, uncertain about the future energy landscape in the next 20–30 years. This urgency may keep energy prices relatively subdued. But the real disruption potential lies in de-dollarization.
Where do you see the floor for oil prices in the near and medium term?
My bias is slightly toward the downside due to economic uncertainties and expected additional supply entering the market. The floor will likely be determined by when high-cost producers start to feel real pressure, and many aren’t there yet due to forward hedging. These hedges need to expire before production decisions are impacted. While Trump might be talking prices down, his industry backers certainly don’t want oil to fall below sustainable levels. I don’t foresee Brent falling far below its current range.
What impact would the Russia-Ukraine ceasefire have on oil prices and markets?
I would expect a short-term bearish impact. Markets would likely interpret peace as an opportunity for improved supply flows. However, we’ve seen with previous sanctions that global trade adapts quickly, flows are simply redirected. If sanctions are lifted or adjusted, shorter transport routes would free up supply in the short term, creating downward pressure on prices. But long-term, I’d say the overall impact is neutral. Russia is unlikely to significantly increase production if it remains under OPEC+ agreements. Gas markets, especially in Europe and Asia, might see the biggest impact from such a development.