Animal abuse probe opened as 2 dolphins, seal and sea lion cub die in Primorye aquariumSociety & Culture October 25, 11:01
South Ossetia's military may be allowed to serve in the Russian army — defense ministerMilitary & Defense October 25, 10:37
Two more criminal cases opened over North Korean fisherman attack at Russian border guardsRussian Politics & Diplomacy October 25, 7:31
Korean News Agency: US wants to deter influence of Russia, China in Asia PacificWorld October 25, 6:41
No flights of Russian, Syrian aviation over Aleppo in last 7 days — Defense MinistryWorld October 25, 5:24
Crimea’s integration, ecology to dominate agenda of RPF forum in YaltaRussian Politics & Diplomacy October 25, 4:31
At least 48 people killed in attack at police college in PakistanWorld October 25, 3:50
Patriarch Kirill I to hold major news conference as part of Orthodox media festivalSociety & Culture October 25, 3:12
Medvedev to hold session of Presidential Council on Strategic Development on TuesdayRussian Politics & Diplomacy October 25, 1:49
This content is available for viewing on PCs and tabletsGo to main page
MOSCOW, October 3. /TASS/. Russian experts, just as the authorities, do not expect a further sharp decrease of oil prices, as none of the key producers and exporters are interested in that. Some believe the prices will even rise in the future.
On Thursday afternoon, Brent oil was traded on the New York Stock Exchange at less than $92 per barrel - a record low level in the past five years. US WTI oil was traded all day at less than $90 per barrel. Oil has not been so cheap since December 2010.
Market players fear that OPEC member countries will not restrict oil production. But there is no unity among them - the UAE Oil Ministry said it is too early to discuss the issue of cutting deliveries, while Iran’s Petroleum Ministry called on OPEC to work jointly to prevent further oil price falls.
The price of $90 per barrel is critical for Russia from the viewpoint of budget implementation. The 2014 budget was calculated proceeding from the price of $100 per barrel, and next year’s budget is based on the price of $96 per barrel of Urals oil (which is on the average 2-3 dollars per barrel cheaper than Brent).
On September 24, the Economic Development Ministry sent to the Finance Ministry its forecast of Russia’s economic future, which stipulated a drop of oil prices to $91 per barrel. The ministry believes the economy will in this case drop 0.6% in 2015, and prices will grow 7.6% The average annual dollar exchange rate will total 40 rubles then.
In September, the Russian Central Bank published a draft of the country’s monetary policy for 2015 and 2016-2017, in which it worked out three scenarios of events. The most likely scenario envisions gradual lowering of oil prices from $106.5 per barrel on the average in 2014 to $102.5 per barrel on the average in 2017.
Later, it became known that the toughest, “stress” scenario stipulating a drop in prices to $60 per barrel was developed.
But Russian Economic Development Minister Alexey Ulyukayev called the last scenario unrealistic. “I think we can hardly count on it just because this is a price that is not comfortable for any of the large oil producers and exporters. The oil offer will just decrease on the market, and balance will be reached. At a lower level than now but far from $60,” he said.
The key reason for falling oil prices is a decrease in demand that can be explained by abundance of oil on the market due to growing oil production in the United States and a weak consumption growth, and there is no evil intent in it, Ivan Kapitonov, assistant professor at the department of the government regulation of the economy at the Russian Presidential Academy of National Economy and Public Administration, said.
“Further lowering of prices is not in the interests of the United States as the key consumer or merchandise manufacturers in that country,” Kapitonov told TASS. “To America, the reduction of the global price is unprofitable because shale oil production projects will become unprofitable. Moreover, the low oil price will strengthen the positions of China and the European Union, that is, US rivals”.
Arguing on the reasons of lowering oil prices, we can hardly agree with supporters of conspiracy theories - there was no increase of production by OPEC countries, it was even vice versa: a number of OPEC members cut production due to various reasons, the expert noted.
Major changes confirming discomfort in the existing price level are currently taking place in the structure of oil production by OPEC countries. In particular, this is reflected in the oil production cut by Saudi Arabia, which wants to return prices to the $100 level. So, the expert believes if the prices fall under $90, OPEC members may speak for reducing quotas in general.
In essence, it is in no one’s interests that oil prices keep falling, everyone is interested in preserving balance, Kapitonov said. In his view, the price may balance at the level of $100 as a result of international efforts.
“But as the decline tendency was long-term, the rise will be rather stretched in time,” he concluded.
Konstantin Simonov, the head of the National Energy Security Fund cited by the BBC’s Russian service, said the oil price ultimately depends on the US authorities’ political decision. He agrees that they don’t need cheap oil.
“There will be no sharp drop because it is unprofitable for the United States. If you slash prices, you will destroy the entire economy of your shale projects, scuttle all your energy hopes. Why do they need that?” Simonov said.
Saudi Arabia, he said, does not need cheap oil either. “By the way, their budget is also made up proceeding from the price of up to $90 per barrel - the Arab spring led to a fast growth of social expenditures,” he explained.
The expert said he is convinced there will be no sharp drop of oil prices and forecast an average oil price in 2015 at $85 per barrel.
ITAR-TASS may not share the opinions of its contributors