Saudi Arabia, Russia and China become authors of low oil prices

The Russian federal budget is based on an oil price of 50 dollars per barrel. While preparing the draft budget, the prices were at this level and this forecast looked quite realistic. "But the dramatic movement of oil prices that we have seen in the past weeks, especially in the last few days, creates rather serious risks for the budget. Further problems may persist and a further decline in oil prices can’t be ruled out. The emergence of new players on the market, such as Iran, creates additional risks for oil prices, but a rebound is possible. Nevertheless, we must be ready for any development of the situation," Russian Prime Minister Dmitry Medvedev said yesterday at a meeting on financial and economic issues.

Meanwhile, a leading expert of the Union of Russian Oil and Gas, Rustam Tankayev, says a stable situation has been created on the market, so prices could rise, but prices continue to fall. Tankayev believes that the main reason is the continuing dumping, which is carried out by Saudi Arabia and other Middle Eastern states. "Saudi Arabia continues this game. The second author of these low prices is Russia. We are in no way trying to think about how to regulate somehow the production and export of oil. And we are steadily increasing exports. This year we reached the absolute record for exports of oil in our history. If the leader does nothing to regulate the supply of oil on the world market, respectively, the prices fall, because when there is a surplus of oil, the prices are high. The third author of these low prices is China. Absolutely, without any desire on its part, China has entered the stream of falling economic indicators during the period of reduction in the rate of economic growth and has also influenced very much the opinion of traders."

Rustam Tankayev is convinced that there will be a completely inevitable rise in oil prices: "The price level that we have now does not allow a sufficient amount of oil onto the world market. We now have a shortage of oil, and demand for oil exceeds supply. But the main consumers (the US, China and Germany) have accumulated huge reserves, unprecedented in the history of its existence. These stocks are applying pressure on the market and do not allow the market to feel the shortage of oil. But that's for now."

The expert believes that a deficit will appear: "A straw remains that will break the camel's back. This straw can be anything. It could be a sharp drop in temperature, for example in the United States. It could be a worsening of the military situation in Saudi Arabia and Yemen, this is likely and possible. It could be a publication about positive data on China, which is also quite probable and possible. There can be many reasons, but there will be only one result – we will not see a smooth rise in prices, but a sharp jump, because the deficit is quite large at the moment."