Russia’s energy ministry revises oil price to $80-$90 per barrel

Oil Well file photo

(Business New Europe – bne.eu – bne/IntelliNews – November 20, 2014)

Russia’s energy ministry has revised the outlook for global oil prices downwards from previous $95 per barrel to $80-$90 per barrel, deputy minister Kirill Molodtsov told the press, without specifying the time frame of the outlook. Currently the ministry is witnessing surplus demand in the oil market, with additional supplies from Algeria and other countries further pressuring the prices, he said.

Currently the price of Russia’s export-blend Urals oil is fluctuating around $76-$78 per barrel, while the ministry of economic development previously warned that prices of $85 per barrel would bring on recession. The Russian federal budget for 2014 is drafted at over $100 per barrel oil price, but the budget is compensated by over 30% ruble devaluation since the beginning of the year.

This week Russia’s finance minister Anton Siluanov told Bloomberg that Russia would enter a recession if the oil price falls to $60 per barrel. “A recession is unavoidable in 2015 if the situation continues to deteriorate,” Siluanov said.

However he said that this was unlikely and predicted that a barrel of oil would cost $80-90 in 2015. If the price of oil remains at $80, and Western sanctions against Russia over alleged aggression in Ukraine continue, GDP growth won’t exceed 1%, Siluanov said.

Siluanov added however that he was sure that “fall in the oil price and deterioration of the situation in the economy will not be as bad as in 2008-2009.” “Growth will restart as soon as the economy adapts to new conditions,” he said, as quoted by Bloomberg.

 

Comment