Conservative Scenario for Economy Development Allows for Reducing the Risks Stemming From Oil Price Fluctuations

3 september 2019 | Ekonomika Segodnya

The Ministry for Economic Development has released a conservative scenario for the development of the Russian economy that assumes that no extra revenue will be made from exports of oil. Alexander Kurdin, the Analytical Center's head of the Department of Research in Fuel, Energy and Housing Utilities, told Economy Today about why the Ministry has come out with this forecast.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

"The Conservative scenario allows for the maximum reduction of risks and possible imbalance brought about by oil price fluctuations seeing how we have some serious negative experience with plummeting oil prices, all forecasts today tend to be fairly conservative," Mr Kurdin explained.

At the same time, according to the expert, at the moment this scenario is highly unlikely, but relying on it is the right move in terms of budget policy. "It allows the country to avoid having to look for reserves or change the tax system in an emergency along the lines of what happened during the harsh crisis of 2014-2015," Mr Kurdin added.

The publication notes that in late August, benchmark oil prices saw a sharp increase, hitting seven week highs. This happened on the back of a drop in stocks and as a result of the influence exerted by the OPEC+ as well as some geopolitical factors.

However, Mr Kurdin believes that given the events of the previous months, the August prices could not be regarded as record breaking. In his opinion, the situation in the global economy leaves much to be desired, so given the current condition with demand, the current oil prices are unusually high.

Source: Economy Today