Russia earned up to trillion rubles thanks to OPEC deal

Russia earned up to trillion rubles thanks to OPEC deal

OPEC production cut deal has brought significant finances to the Russian budget thanks to increase in oil prices, Russia's Energy Minister Alexander Novak said.

"This deal brought additional revenues to the budget thanks to an increase in oil prices. We earned from at least 700 billion to 1 trillion rubles. Companies also benefited from this deal by about 30% from the beginning of 2016," he said.

He complained that the effect of OPEC deal for companies was less than for the budget, due to strengthening of the ruble and a progressive scale of taxation, which depends on the oil price. "Nevertheless, believe me, companies are not loosing money," Novak added.

As Sberbank CIB analyst Valery Nesterov noted in an interview with Vestnik Kavkaza, this statement was made by Alexander Novak to support OPEC deal in the eyes of both participants and market speculators.

"Although estimates of budget revenues are likely approximate, there's no doubt that the effect of this deal is measured exactly by hundreds of billions of rubles. At the same time, it needs such propaganda and support, that's why there are so many statements about it, since it is necessasary to adess more pessimistic estimates," he noted.

An associate professor of the Graduate School of Corporate Management of RANEPA, senior fellow at IE RAS, Ivan Kapitonov, stressed that against the background of Russia's declining oil production, any deals that limit world oil production are beneficial to the Russian budget due to growth of oil prices.

"We observed the effect in the form of increase in oil prices. So of course prolongation of such deal with OPEC or its expansion will be expected in the future and will only benefit us," he believes.

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