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Wednesday, March 14, 2018

In Russia, the barrel will cost $40

Russian Prime Minister Dmitry Medvedev chaired the first government meeting on the state budget for 2017-2019. He stressed that the national Treasury will be filled on the basis of the cost of a barrel to $40. Now the cost of “black gold” is around $50. However, the head of the government warned that we should not delude ourselves: “the improvement in the oil markets, we should not cheat”.

photo: Gennady Cherkasov

In the last two years prices of oil pulling is probably just as scared as in the history of commodity exchanges. In the summer of 2014, a barrel cost about $125, now give him about $50. But in January, a barrel fell below $30 — and predicted that will be $25.

It would be a collapse of the Russian budget. This year the Treasury was formed on the basis of the cost of a barrel of $50. This was too optimistic forecast. According to Rosstat, in the I quarter of the cost of the “barrel” was only $33. Of course, now we see the opposite trend. In early June, the quotation of a barrel reached $52. The reasons for this rise is evidence from the USA, where fell not only production, but also the fuel supply.

However, in the beginning of this week, oil prices started to decline again. The culprits were made by the speculators: some hope for the decision of the Federal reserve, which can raise the refinancing rate, which will increase the dollar and will increase the interest of market players to the us currency then the price of oil will inevitably decline); other speculators currently shift their investments into other instruments, for example in gold, the quotations for which has increased since the beginning of the year by 21%.

However, anyway, hope that oil prices will please both producers and Resellers of its market, still exists. For example, the head of one of the largest domestic mining companies predicted the oil shortage and competition for share of the market. He noted that there will come a period of sustained growth in oil prices, as demand in the world continues to grow, and production is reduced.

The same is confirmed by the International energy Agency raised its forecast for global oil demand in 2016 to 1.3 million barrels compared to the year 2015. According to the IEA, the decline of oil production outside OPEC in 2016 will amount to 900 thousand barrels per day. OPEC production fell in may compared with April by 110 thousand barrels.

In the case of Russia the most direct way. Speaking in the state Duma, Chairman of the Budget Committee Andrey Makarov said that the forecasts of the Bank of Russia much more accurately than the forecasts of economic development.

The office of Elvira Nabiullina believe that oil prices in the near future the average will not exceed $40. That is why Dmitry Medvedev warned his subordinates that the barrel above $50 do not count.

So, you will have to cut social and military spending. Therefore, funds for indexation of pensions may not be enough.

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