Brent crude futures fell below $25 per barrel, and the dollar exchange rate jumped to almost 81 rubles. Experts get started talking that global oil storage facilities can reach their peak capacity in the coming months due to a simultaneous drop in fuel demand and an oversupply in the market; and some of them even predicted that oil prices could go below zero.
Analyzing the situation, the chairman of Russia's Union of Oil & Gas Producers, former Russian energy minister (1993-1996) Yuri Shafranik called on "not to make a fuss and not to be nervous, especially against the backdrop of a pandemic." "We’ll see how the United States and Saudi Arabia would react. Why do we need to be the first now, we need to react based on the situation, perhaps consolidating in something, maybe not. Now we don’t have to be the first, we need to stay in the second line," Shafranik said.
He also urged not to compare the situation in Russia's fuel and energy complex and the one of the U.S. directly: "We are in quite different coordinate systems with the U.S., and a straightforward comparison of some parameters in the fuel and energy complex, of prices is inappropriate and unqualified. This may lead to poorly qualified forecasts."
Shafranik believes that oil prices will rise by the end of the year: "According to the models we have developed, according to my personal conviction, by the end of the year we will have $40 per barrel, and next year, maybe $50 per barrel. I think we will reach $50 in 2021. Let’s take $45 - I would suggest that colleagues from the government rely on this figure."
The expert’s relatively optimistic scenario is based on the fact that, in his opinion, "the main indicators of the Russian fuel and energy complex are quite decent": "By 2010, we restored the potential of the Soviet Union and started new projects. We solved a lot of problems. Indeed, we were not able to file export volumes in such quantities until 2000, there were scandals, there was a struggle for every ton of oil, including the corruption component. That was the case."
Today, in order to overcome the crisis, Shafranik called on those in power to loosen their tax policies: "We predict that in the most difficult times we will still have to change the tax system. Isn't it better to start it earlier? I would strongly advise the government to take decisive measures - there is no special things to do, at least the Constitution doesn’t need to be changed for this purpose - all small and medium-sized reserves and deposits must be transferred to the territories. Some excesses were committed in the 1990s, but the state is different now. If there are excesses - the government will correct them. But it will be the beginning of some recovery."
To revitalize the Russian economy, Shafranik called on the government and oil companies to prevent a reduction in investment in the fuel and energy complex.
