Oil prices fall

By Vestnik Kavkaza

Today prices for Brent and WTI oil continue falling in the context of expectations that the volume of oil supplies on the world market is quite sufficient to satisfy reducing demand, according to Bloomberg. Last week Saudi Arabia decreased oil prices to the minimal level of 2008; it led to an oil price fall in the world. However, Sergey Vakhrameyev, an expert of IC “Ankor Invest,” told RIA Novosti that Saudi Arabia took the step not to start “a price war” with competitors, but to draw attention to the necessity of making a decision on oil production.

Valentin Romanov, a member of the State Duma Committee for Energy, says that the current situation is worsened by several factors: “We can’t ignore such tendencies as the West’s course for renewable energy sources, i.e. substitution of traditional hydrocarbons. We can’t ignore new phenomena which are connected with the shale revolution in the U.S. It's no secret that the Americans have significantly increased internal production of oil and gas in recent years. There are ambitions that tomorrow they will replace Russia in Europe. This is not true. I think it won’t happen tomorrow. But we should analyze the situation seriously, as new tendencies influence the situation.”

According to Romanov, in the oil sphere Russia surpasses Saudi Arabia 1.5 times. But those who say that only objective reasons lead to the oil price drop should remember history. “We remember that about 25 years ago, when the U.S. was doing its best to destroy their main geopolitical rival, the Soviet Union, oil prices fell. Our Premier was Victor Chernomyrdin, and 1 barrel cost $9-11. According to the results of 2013, a barrel cost $113. At the moment it is about $91. I think there are no objective reasons for a disastrous drop in oil prices. But that doesn’t mean we should treat the current tendency easily. I don’t hide my serious concerns that the U.S. could repeat what they did. There is a book by the American journalist Peter Schweitzer titled “Victory: The Reagan Administration's Secret Strategy That Hastened the Collapse of the Soviet Union ” He speaks in detail about the work of the American authorities in breaking the resistance of Saudi Arabia and other oil exporters, how they led to an artificial oil crisis and a fall in prices which resulted in the collapse of the Soviet Union’s budget.”

Romanov is sure that the events in Ukraine are a consequence of “the cynical political work of the West against Russia. Russia should protect its national interests, and this led to the events in Crimea, Sevastopol. Then, there were Donetsk, Lugansk, sanctions, counter-sanctions. And the chain is going on. The Ministry of Economic Development predicts that 2015 will bring 1.3 percent growth. It is not sufficient for Russia. We need at least 5-6 percent growth annually. I remind you that there is giant China nearby; it has had annual growth of 7-11 percent for 30 years. I repeat there are no objective conditions for a drastic drop in oil prices, but the rest needs regular analysis and certain measures taken by the Russian government.”