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Oil market heads towards new supercycle

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Karin Kneissl, an independent member of the board of directors of Rosneft and Austria's former Foreign Minister, supposes that a new supercycle has begun in the global commodity market. At the same time, she emphasizes the insufficiency of investments in the sector.

Karin Kneissl came to such a conclusion analyzing the price of some metals. At the St. Petersburg International Economic Forum (SPIEF), Karin Kneissl said that no one cared about lithium 10 years ago and now people began assessing the negative effect of the metal exploration on the environment. This has a direct influence on the pricing of lithium and other metals.

Austria's former Foreign Minister is sure that harmless energy does not exist. She pinpoints that any type of energy has its implications for the environment. However, political persecution of a certain industry may lead to a drop in investments, a freeze in production, and a deficit, which is likely to cause a new supercycle.

At the moment, the investment flow in the commodity market is not sufficient. The decline was mainly caused by climate changes and the coronavirus pandemic. At the beginning of the year, analysts of the commodity market, including experts at JPMorgan and The Goldman Sachs, warned about a possible supercycle in the market provoked by an aggressive climate policy of some countries and the coronavirus spread. Early this year, currency strategists at JPMorgan and The Goldman Sachs foresaw a rise in oil price to $80-$100 per barrel.

Notably, the oil market supercycle is a long-lasting situation when demand exceeds supply. As a result, prices of hydrocarbons remain high for a long period of time. According to The Financial Times, the latest supercycle was recorded between 2003 and 2014.

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