Prices on oil will not fall under 80-85 dollars per barrel

8 october 2014

The situation on the world oil market has deteriorated. Prices are falling and pessimistic predictions about $60 per barrel don’t seem ephemeral anymore. Moreover, the largest oil importer - the US – rapidly develops the production of shale oil and gas, reducing purchases on the international market.

Leonid Grigoriev
Leonid Grigoriev
Chief Adviser to Head of the Analytical Center

The consequences this situation may lead to were described in the program "Morning Russia", "Russia 1" channel, by Chief Adviser to Director General of the Analytical Center Leonid Grigoriev. The expert believes that "it is early to panic," as the world economy consumes the oil it produced. "Americans have made a huge step in energy and gas productions and became close to energy independence”, - said the expert. – “Of course, they did not do this all by themselves, but together with Mexico and Canada, that is, within the same continent".

According to Mr. Grigoriev, prices on oil will not fall under $ 80-85 per barrel because the oil-producing countries will not let that happen. For example, in Russia about the half of the country's budget depends on oil. According to the expert, in these countries the costs in social sphere and defense is constantly increasing, and if they want to balance the budget they cannot afford prices less than $ 80-90 per barrel. The expert added that it is necessary to avoid situations when oil is the main source of income and adapt the economy, for example - by developing the industry.

According to the expert, Russia has not managed to occupy a niche in the refined products market, as in the early 90s, when it was the most favorable period for that. The country was in crisis and today this market became extremely competitive. "Today the gas chemistry is of interest, as gas reserves in our country are large enough, but such projects are very expensive" – Mr. Grigoriev considers.

When answering a question about the prospects of alternative energy sources – solar energy, wind energy, water energy, the expert cited "Global and Russian Energy Outlook up to 2040", which had been prepared by experts of the Energy Research Institute of Russian Academy of Sciences and the Analytical Center. "We made the following prediction: about 25% of the world energy consumption will be gas, 25% - coal, 27% ​​- oil and 23% - all other sources”, - said the expert.  – “Renewable energy sources will not replace them".