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Oil price may return to around $100 in medium-term prospect — former IMF chief economist

January 13, 2015, 12:56 UTC+3
Russia will need 6-8 years of structural reform to exit crisis with the current level of oil prices
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© EPA/WU HONG

MOSCOW, January 13. /TASS/. Oil prices are very volatile and it is possible that in perspective they may hit back the figure of $100 per barrel, former Chief Economist and Director of Research at the IMF and Harvard University Professor Kenneth Rogoff said on Tuesday.

Asked to comment whether crude price would at some point return to its previous $100 per barrel mark, Rogoff said in an interview with TASS that “no one knows” that.

Saudi billionaire businessman Prince Alwaleed bin Talal said in an interview with USA Today on Monday: “If supply stays where it is, and demand remains weak, you better believe it [the oil price] is gonna go down more… But I'm sure we're never going to see $100 anymore.”

Commenting on Prince Alwaleed bin Talal’s statement Rogoff said: “I am taking a bet that he is looking at a year or two. I would take that bet actually.”

“I mean I am not promising that the future will never touch a [figure of] $100 per barrel again… You never know what’s gonna happen, the oil prices are very volatile,” the expert added.

Rogoff said Russia will need to implement structural reforms that normally take 6-8 years to overcome the crisis at current world oil prices.

If world oil prices go up, the consequences of the crisis will be milder and the exit easier but if the oil price stays at the current level, Russia will be required to carry out structural reform that will take a long time, Rogoff said at a press conference devoted to the Gaidar economic forum.

If previous crises in various countries are analyzed, it normally takes 6-8 years to overcome crisis implications in the financial sector, the expert said.

This time is needed to reach the zero level, from which the country started to slide into the crisis, Rogoff said.

On Tuesday the oil prices continued falling hitting their lows since the spring of 2009. The price of Brent crude fell by 4.3% on the Intercontinental Exchange (ICE) in London to $45.39 per barrel while WTI dropped by 3.39% to $44.52 per barrel by 07:50 GMT.

Infographics Oil prices over 30 years Oil prices over 30 years
Year-average inflation-adjusted oil price. Infographics by TASS

 

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