“An economist’s advice is to make plans and set budgets based on the most reasonable price $70-80 p/b”, said the Chief Advisor to the Head of the Analytical Center Leonid Grigoriev speaking at the Gaydar’s Forum.
“The oil price development depends on three factors: current demand and supply (as for today there is a surplus of supply over demand by 1%), short-time factors (which now include, in particular, oil pumping reduction in China and "shale revolution" in the US), and a political level, which is the hardest to control – it is not always easy to differentiate between a political action and economic usefulness”, said the expert.
The oil price can momentarily fluctuate even to $50, but the most reasonable price for today is $80, according to Mr. Grigoriev. “Objectively, oil prices should fluctuate in between $70 and a maximum of $90 p/b. The $50 – a rate which can cause a budget misbalance and as a result social-economic problems for some countries, particularly Arab ones”, said the expert.
The budget misbalance is becoming an issue for all oil producing countries, and the world is experiencing complex processes related to deceleration in economic growth. World Bank is predicting the same deceleration in the entire world. That’s why there will be no easy and fast oil prices recovery, and it is likely that in 2015 the world will live in the conditions of unusually cheap oil. Political processes, particularly in the Middle East, restrict an opportunity to forecast the time when oil prices raising happens, but the majority of Arab countries is badly in need for price ricing, and it is likely that in March after the OPEC summit the situation will become better.
For more information check (in Russian):
«Точки роста и зоны риска» - Российская газета
«Бедность как плата за лояльность» - Expert Online
«Холодная война за нефть» - Газета.ru