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Oil may become 'military bonus’ from aggression against Syria

September 03, 2013, 10:23 UTC+3

Even the cutting of budget expenditure, about which President Vladimir Putin warned, may not be needed

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A looming war in the Middle East may be quite useful for the Russian budget. Experts from the French bank Societe Generale believe that the world oil price may skyrocket to 150 U.S. dollars per barrel, the Nezavisimaya Gazeta daily reported.

For Russia, the budget of which is formed almost by half from the oil and gas revenues, this scenario would be a gift, the article noted. Even the cutting of budget expenditure, about which President Vladimir Putin warned, may not be needed.

“According to the estimates of analysts from Societe Generale, the oil price may reach $150 per barrel in the worst case that will exceed a historic record level of $147.5 per barrel in 2008,” the daily noted.

After it was reported about an alleged use of chemical weapons in a Damascus outskirt on August 21, the Brent oil price went up six percent from $109 to $116 per barrel that is the highest level for the last two years. “The analysts are concerned that military actions in Syria may exert some pressure on the oil reserves of other countries in the region. Moreover, the disorders in Egypt, through which the Suez Canal is passing, being one of the main oil delivery routes, should not be ignored,” the Echo of Moscow radio station noted.

Meanwhile, Russia is traditionally dependent from the world prices on the energy carriers. Analysts from the Gaidar Institute of Economic Policy have recently noted this fact. According to their reports, the oil and gas revenues will reach 44-46% of federal budget revenues in 2013-2015. The Russian authorities have already prepared for the budget sequestering amid the current stagnation.

The change in the average Urals oil price by one U.S. dollar will result in over one percent change in the oil and gas revenues. This change makes 70-75 billion rubles.

“A Western military intervention against Syria is becoming more and more real, therefore, traders throughout the world focused their attention on the black gold prices,” the Nezavisimaya Gazeta daily quoted director of the analytical department of the Alpari company Alexander Razuvayev as saying.

“From our point of view, the 2003 situation, when the United States and its allies unleashed a military operation against Iraq, may recur at the raw material market,” the expert noted. “The oil will get a military bonus, the Brent oil price per barrel may reach $120 per barrel or even $130 per barrel, but it will hardly break the historical maximum levels of 2008,” he noted.

Co-director of the analytical department of the Investcafe agency Grigory Birg agreed that the Brent oil may reach $150 per barrel in some variant of development, “This may happen if the international military forces will unleash active combat actions in Syria.”

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