Russian President Vladimir Putin believes that the oil market will stabilize in the winter, in the first quarter of 2015, and the fall in oil prices is a natural reaction to OPEC's decision not to cut production volumes. The price of oil began to decrease quickly after the decision of OPEC to maintain oil production at the level of 30 million barrels per day. Vestnik Kavkaza discussed the situation on the oil market and Russia's economic prospects with the head of the State Duma's Committee for Energy, Ivan Grachev. According to him, after the meeting of representatives of Russia, Mexico, Saudi Arabia and Venezuela held on November 25 in Vienna, it became clear that the body would decide to keep the current quotas. "I hoped that a decision to secure the implementation of this quota will still be made, since right now the quota is being slightly exceeded," the lawmaker said.
However, Grachev urged Russians not to panic. "When our colleague, the head of the Rosneft company [Igor] Sechin said that Russia, unlike many countries, can withstand the price of 60 dollars per barrel, in my opinion this means that one should understand that, despite the alarmist statements of another colleague, Economic Development Minister Alexei Ulyukayev, Russia has still a budget surplus. Now the budget surplus amounts to a trillion rubles, which equals the entire Ukrainian budget," he said.
According to Grachev, the decline in oil prices is partly politically motivated. "It is basically a matter of politics, rather than a matter of economics. Nothing caused this decrease, it's unnatural. Economic growth continues, and next year's forecast is 3.5-3.9%. Hence the demand for energy is increasing. Sources of energy no more efficient than hydrocarbons have appeared. If we look at the amount of drilling, for the first time in recent years the volume of drilling in the US has declined. This year, the projected decline in drilling is six percent. Consequently, there is now fair reason for a decrease in oil prices. In fact, the situation is quite the opposite," he stressed.
