On Monday, Brent oil price fell lower than $50 for the first time since January 15th, due to concerns about oversupply of oil on the market. In this context, pessimistic experts began to speak about another ‘Black August’, as the ruble exchange rate fell as well.
However, the Chief Advisor to the Head of the Analytical Center of the Government of the Russian Federation, the Head of the Department of World Economy, Head of the Chair of World Economy of the Faculty of World Economy and International Affairs of the HSE, Leonid Grigoriev, said that lower oil prices will contribute to economic reorganization.
He recalls that “in the early 1970s, the world price was 4 dollars, and when the strategy was written in 2002-2003, there was a dream of 20 dollars. 20 dollars was the average nominal price, that was set from 1986 to 2002… There is a technological breakthrough under way, the production of oil, including shale oil, has changed to a large extent from extractive to manufacturing. The speed of drilling became completely mad. What they used to drill in two months, now they drill in 10 days. American production of shale oil is the following: if oil is a little higher, they begin to drill; a little lower and they leave. At the current production, about half of the shale oil is not profitable at 60 dollars. People are comfortable with the fact that they have invested some money in it, which won't be repaid after two years, as we would like, but after 10. There is no tragedy in this if the financial market is developed.”
Leonid Grigoriev predicts that now Russia will have a different economy: “The country may receive excessive, rental income from exporting its products. In general, Russia has always lived like this. 600 years ago, when martens were killed, there was an export crisis of martens, the price for martens dropped, there were few of them. But you know, maybe we will work with our head, won’t we? Therefore, it is an endless conversation that we need to modernize, get off the oil needle. Let’s get off of it. 50 dollars, okay, 50 dollars, it's time to get off the oil needle, work with our heads and hands.”
