Russian Finance Minister Anton Siluanov has said that he believes oil prices could drop as low as $30 in 2016. The statement comes after oil reached a seven year low of just below $35 per barrel earlier this week.
“Everything indicates that low oil prices are likely to dominate next year. And it is possible that at some periods [the oil price] will be $30 per barrel,” said Siluanov, speaking about the future of the international oil glut that has been pushing down the price of oil since the second half of 2014. Russia’s large energy industry has been among the hardest hit by the decreased prices, partly causing the value of the ruble to decline in relation to other currencies in the foreign exchange market. Oil revenues also account for the largest part of government revenues in Russia, causing the government to increase its deficit as the price of oil has fallen.
Siluanov, however, also offered a long term view of a modest recovery for oil. Even though he forecasted the possibility of $30 oil next year, he also suggested that the next seven years could see barrel prices reach as high as $60 again. While this would still be a reduction from the prices that oil commanded prior to the beginning of the glut, such an increase would substantially increase energy revenues in Russia and other countries heavily dependent on oil production.
Government.ru [CC BY 4.0 (http://creativecommons.org/licenses/by/4.0) or CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons
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