• 4 minutes China - EU: Xi Says Cooperation Is Mainstream In Their Ties
  • 8 minutes The Mining Industry Has Had It Easy For Far Too Long
  • 11 minutes Lawsuit-Happy Councilor Wants to Take Big Oil to Court
  • 15 minutes U.S. Shale Output may Start Dropping Next Year
  • 3 hours Dutch Populists Shock the EU with Election Victory
  • 46 mins Venezuela Says Russian Troops Land to Service Military Equipment
  • 1 hour Trump to Make Allies Pay More to Host US Bases
  • 9 hours Multi-well Pad Drilling Cost Question
  • 19 hours U.S.-China Trade War Poses Biggest Risk To Global Stability
  • 2 hours Public Companies that attended OPEC "THREAT DINNER" at CERRAWEEK must disclose any risks in their SEC Financial filings.
  • 4 hours 3 Pipes: EPIC 900K, CACTUS II 670K, GREY OAKS 800K
  • 2 hours England Running Out of Water?
  • 2 hours Read: OPEC THREATENED TO KILL US SHALE
  • 2 hours Mexico Demands Spain and the Vatican Apologize to Indigenous People for the Spanish Conquest
  • 1 day One Last Warning For The U.S. Shale Patch
  • 1 day European Parliament demands Nord-Stream-ii pipeline to be Stopped
  • 2 days Modular Nuclear Reactors
Alberta’s Price-Correcting Plan Backfires

Alberta’s Price-Correcting Plan Backfires

Alberta’s obligatory production cuts have…

Russia Plans 2017-2019 Budget Based On $40 Barrel

Moscow

Russia is budgeting its federal spending to expectations that oil prices will hover around $40 a barrel for the next several years, according to a new report by Bloomberg.

Such preparations go against predictions by international oil industry experts that barrel prices will rise to $60 and remain there over the long term. These forecasts are based on expectations that the global oil supply glut will reverse over the next couple of years, bringing prices up to a new normal, which will still stand far lower than the $100+ levels seen before the market crash occurred in late 2014.

A recent Bloomberg survey of oil analysts showed a 16 percent expected increase in the price of the Brent barrel, the international benchmark, by the end of the year led by production cuts by the Organization of Petroleum Exporting Countries (OPEC) and eleven other partner nations.

The Finance Ministry, the cabinet and the central bank are leaning on the cautious side in terms of their expectations regarding growth, driven still to a large degree by oil,” Piotr Matys, a currency strategist at Rabobank in London said of Russia’s bearish market outlook. “It’s better to be conservative and to be surprised on the upside than too optimistic and end up disappointed.”

Related: Energy Market Deregulation: Be Careful What You Wish For

On Friday, Russian policy makers predicted a $50 Urals barrel on average for the current year, with prices settling to a low of $40 by the end of 2017. The following two years will see stability at that level, according to the Moscow model.

“Once (actually more than once) bitten, twice shy,” Elina Ribakova, an economist at Deutsche Bank AG in London told Bloomberg this week. “The central bank and the Finance Ministry are sticking to the conservative $40 oil scenario because they want to be ready for and protect themselves against the worst-case scenario.”

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • Lee James on March 25 2017 said:
    Russia wishes to protect itself against a worst-case scenario by assuming $40 oil. That worst case scenario is that the Russian people will lose faith in the economy and Putin.

    Russia wishes to maintain a strident international presence. Bombs and support for questionable world leaders costs money.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News