It would be better for Russia if oil prices were higher than $46 a barrel, Russian President Vladimir Putin said on Thursday.
In an interview with Russian TV channel Rossiya, Putin talked about the Russian economy and the impact of the coronavirus pandemic on it and on oil prices.
Commenting on the fact that Brent Crude prices have returned to $46 a barrel, Putin said, “it would be better if the price were a bit higher,” according to the interview posted on the Kremlin’s website.
The higher the price of oil, the higher Russia’s budgetary reserves are, creating an additional cushion for the budget to finance its expenses, including social welfare, Putin said.
At the beginning of the oil price crisis, caused – among other things – by the oil price war between Saudi Arabia and Russia – Russia’s Finance Ministry said that Moscow could live with $25 oil for years as it had enough resources to cover budget shortfalls amid oil prices at $25-30 a barrel for six to ten years.
The $42.40 price of Russia’s flagship export grade, Urals, is the price at which Russia’s budget is balanced, the Russian Finance Ministry said, noting that the country’s sovereign wealth fund, the National Wealth Fund (NWF), had as of March 1 liquid assets worth US$150.1 billion, or 9.2 percent of Russia’s gross domestic product (GDP).
Currently, Russia’s economy is suffering the consequences of the oil price crash it helped create with the temporary rift with its OPEC+ partner Saudi Arabia in March. The Russian ruble crashed, and Russia’s oil income shrank as a result of the plunge in oil prices.
The oil price crash, along with the coronavirus-driven global recession, will result in Russia’s economy shrinking this year by 6 percent, or by the most in 11 years, the World Bank said in its latest economic report on Russia last month.
By Tsvetana Paraskova for Oilprice.com
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