In 2015 world will have to live in conditions of unusually cheap oil

15 january 2015 | IA REGNUM

The Chief Adviser to the Head of the Analytical Center Leonid Grigoriev spoke at the Gaidar Forum.

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

For a long time experts have been saying: oil may cost $50 p/b, and this price can be maintained for some time, IA REGNUM cites Mr. Grigoriev. Oil prices’ development depends on three factors: a current balance of supply and demand, which in 2014 showed a surplus of supply over demand; short-term factors, which now include, in particular, oil pumping reduction in China and "shale revolution" in the US and finally, a political level, controlling of which is the most complicated: dictating to any country – oil exporter what the volume of production should be like through OPEC is hardly possible, according to the expert.

"The price $100 p/b was a "bonus" for the Fukushima Daiichi nuclear disaster and the war in Libya. Objectively, oil prices should fluctuate in between $70 and a maximum of $90 p/b. The $50 rate will not last long, as Arab countries should take into account their budgets’ specifications. Even now this rate may be the cause of socio-economic problems in some countries”, said Mr. Grigoriev.

An oil prices’ easy and quick recovery is unlikely to happen and it is likely that in 2015 world will have to live in conditions of unusually cheap oil. The next OPEC summit will take place in March; in the first quarter all governments dependent on hydrocarbon exports including Russia will have to take measures that will balance economies "spoiled" by high oil prices.