Downhill

After the OPEC decision to maintain oil production at the same level, its price dropped below $ 70 per barrel

The OPEC countries on Thursday at the next summit agreed not to change the current quota for oil production, which is now 30 million barrels per day. This decision was expected for many, even on the eve of the Cartel meeting, world oil prices fell to the lowest level in almost five years. After the meeting of OPEC, the cost of a barrel of the so -called Texas oil WTI decreased even more - by the evening of Friday below $ 69 . Following the drop in oil prices, the indices of the Russian stock market began to decline, and the ruble rate again updated historical minimums.

On Friday, the weakening of the ruble continued, his exchange rate on the Moscow Exchange already at the beginning of the auction for a short time fell to almost 50 rubles per dollar and up to 61 rubles 70 kopecks per euro. The official courses of the Russian currency for the weekend and Monday are 49.32 and 61.41. That is, in comparison with the previous day, the dollar and euros strengthened by 1.6 and 1.8 percent, respectively. Former Deputy Minister of Economic Development, and now Deputy Chairman of Vnesheconombank Andrei Krypach, believes that a drop in oil prices marked from Thursday evening is not a limit. "OPEC decision does not reduce oil production will lead to a decrease in oil prices to $ 60 per barrel in the short term, but in the future prices can again rise to a new equilibrium level of $ 85-95 per barrel," Interfax Cleepach reports. The budget of Russia for the next year is overpass at $ 96 per barrel of Russian oil Urals (this variety is a little cheaper than Brent or WTI).

Similar forecasts and the head of the largest oil company Rosneft in Russia Igor Sechin . In an interview with the Austrian newspaper Die Presse , he stated that his companies expect a possible drop in price up to $ 60 per barrel and lower, but only during the first half of the year, or rather, by the end of the first half of the next year. However, according to him, this level of price is quite happy with Rosneft.

With the forecast, according to which, by the spring of next year, the price of oil may decrease to $ 60 per barrel, the head of the department of analytical studies of the Universal Capital investment company Dmitry Alexandrov also agrees. In his opinion, the budget of Russia, which is cooked based on the price of $ 95 per barrel of oil, will not seriously suffer due to the devaluation of the ruble, but it is impossible to infinitely avoiding the budget deficit due to the depreciation of the national currency: it is impossible:

- This is a very likely script. True, I did not expect such a serious reaction yesterday, since the markets did not expect [before the OPEC meeting] that there would be some significant reduction in quotas. The movement in oil down is to a greater extent, nevertheless, the tightening of the US monetary policy. The growth of the federal reserve rate, which can just occur in the second quarter of 2015, will certainly contribute to the fact that oil still lost quite significantly. I think that the price of oil will remain more or less stable until the end of March. Then begins a new round of sliding to a level of about 60-65 dollars per barrel.

Reducing oil prices and sanctions will lead to a delay in the commissioning of new Russian deposits

- How will this affect the oil industry of Russia, because many deposits become virtually unprofitable at such a price?

- I do not expect a significant reduction in production in Russia, perhaps it will be about 2-3 percent per year, and this will be more due to the slower commissioning of new deposits. Moreover, the new deposits will not be introduced according to the schedule not even because oil has become much cheaper, but due to sanctions. Russia can lose about 10 million tons in production over the next year.

- The federal budget of Russia for the next year is designed based on the average annual oil price of $ 96 per barrel . How close to reality is it?

It is impossible to avoid problems for many years by grunt due to the devaluation of the ruble, especially if it is not accompanied by incentives for the internal development of the business

- Such a figure, indeed, looks very small for next year. Another thing is that it is important to evaluate the ruble equivalent, because the expenditure part will be executed on the basis of it. Therefore, there are no risks of large ruble deficiency. Thanks to the devaluation of the ruble from the point of view of the execution of expenses, there will be no significant ruble budget deficit. Another thing is that it is impossible to avoid problems for many years to a series due to such devaluation, especially if it is not accompanied by incentives for the internal development of the business, which is not yet. The next year, at least the first part of it, you can safely pass. But if the situation will worsen further, then other measures will be required, not a monetary plan that will have to contribute to a more sustainable balance of the budget in the long run, ”says Dmitry Alexandrov.

Professor of the Higher School of Economics, director of the Institute of Strategic Analysis of the FBC company Igor Nikolaev believes that the Russian authorities have been underestimated the risks emanating from the increase in the production of shale oil in the United States. According to Nikolaev, with an oil cost of 60 percent, it is possible to fall the ruble rate to a mark of 60 rubles per dollar:

Slantsy oil deposit in Texas, USA

- Everything happened not yesterday, but much earlier and not in one day. Over the past few years, Russia, hoping that the shale prospects, first of all, in the USA are some kind of bubble, clearly underestimated what could happen. That is why OPEC did not make a decision to reduce quotas. The United States rapidly increased oil production, almost doubled it over the past 5 years. Starting next year, the United States also becomes an exporter of oil. In such a situation, OPEC simply could not make a decision to reduce quotas, because the markets would be immediately occupied by the United States with its shale oil.

Russia, hoping that the shale prospects, first of all, in the USA are some kind of bubble, clearly underestimated what could happen

- What will happen to the ruble and oil prices in the future?

- Sleep prospects have not yet been fully implemented. The United States will increase prey. They have opportunities for this. Moreover, in individual wells it is cost-effective to produce oil at 40-60 dollars per barrel, that is, for the United States, this level of prices is not critical. This is the most important factor in favor of the fact that oil prices will decline, but there are other factors. The world economy is restored uncertainly. The pace of economic growth of China is reduced. Another factor is the policy of the federal reserve system. The Fed has completed the program of money incentives for the economy in the fall. Moreover, the Fed said, and they will do this that from next year will raise the basic rates. This automatically makes the dollar more expensive. Since our oil is nominated in dollars, this is accompanied by a drop in oil price in dollar terms. We can see the marks of $ 60 per barrel. I do not think that there will be $ 20-25, such prices remained in the past, but 60 is quite real. If oil is so decreasing in price, then the prospects of the ruble are not bad. I think that at a price of $ 60 per barrel, the dollar can cost 60 rubles, such a formula seems relevant and quite viable, ”says Igor Nikolaev.

The reluctance of OPEC to intervene in the current situation in the global oil market has already forced industry experts to talk about long -term changes in the industry. “We enter the new era for oil prices, where the market itself, and not OPEC or Saudi Arabia, will control the offer. These are huge changes, the signal that they are surrendered. The markets have changed for many years to come,” the SocietE Generale, head of the Oil Research Department, Mike Whitner , quoted the department of oil research.

Bijan Zangan, Minister of Oil Iran, who, like Russia, advocates reducing oil production

On the eve of the OPEC summit, Russia failed to agree with the leading representatives of the cartel on the synchronous reduction in the level of oil production to stabilize prices for it. In response to the results of the meeting, Igor Sechin participating in it announced that Russia would not reduce oil production, since its excess in the market is not, according to him, “critical”. However, according to American observers, Moscow simply cannot afford to reduce oil production and export.

Currency courses in a total point in Moscow on the morning of November 28:

The dollar exchange rate #Moscow #blackFriday Pic.twitter.com/ruun3qhkp6

- Alexander Roslyakov (@roslyakovap) November 28, 2014

The falling prices of oil turned Russia into a sacrifice of circumstances that it is not capable of having any influence. Moreover, its nearest financial future may depend on the decisions taken by Saudi Arabia. So believes the American economist, professor of college "Citadel" in South Carolina Richard Ebeling :

Saudi Arabia does not express much desire to reduce prey largely due to fear that other manufacturers will not follow its example

- Russia has no much choice. Of course, she could suspend the prey on several wells, which, due to decreasing prices, are unprofitable as a symbolic gesture. But, reducing exports, she risks the loss of some customers whom she may not be returned in the future. Moreover, a decrease in oil production by Russia is not able to have any noticeable effect on pricing in oil markets. Moscow in this sense is not Er-Riyad. By the way, Saudi Arabia does not express much desire to reduce prey largely due to fear that other manufacturers will not follow its example-instead of reducing export, they will occupy a niche liberated by the Saudis.

- As experts say, the Russian authorities, as they say, were lucky, because together with the reducing of oil, the ruble exchange rate has fallen strongly, which allows them to still receive rather high ruble revenues from export and fulfill their budgetary obligations. Sechin confirmed this point of view, saying that the situation for the government is not critical. How long can such "luck" last?

Until the Saudis begin to control the volume of produced and exported oil, it is possible that there is a significant supply of prices

- I think that there is a danger of aggravation of Russian financial problems. The fact is that the Russian government receives significantly less income as a result of the fall of oil prices. According to the estimated Minister of Finance of Russia, the cost of oil cost the country in an amount close to 100 billion dollars. This is a gigantic figure for her. The fact that so far the Russian authorities managed to finance their budget expenditures thanks to the reduced rubles does not mean that, due to the increase in imported goods, the purchasing power of the population has not significantly fallen. Moreover, Vladimir Putin speaks a lot about state investments in the creation of infrastructure, the construction of roads and other similar projects, in the current situation there will simply be no funds for this, or the state budget will not be balanced.

- What can be said about how long it will last this unexpected oil cost for many and how low energy prices can fall?

If the comparative cheapness of oil is reflected at the level of the production of shale oil, then this is most likely a short -term phenomenon

- It is difficult to answer this question. But it can be assumed that until the Saudis begins to control the volume of produced and exported oil, taking into account the lack of an agreement between OPEC and other oil exporters, their unpreparedness to conduct plays to reduce oil prices, it is quite possible that there is a significant supply of prices. If you add to this the ongoing boom of the shale oil and gas industry, then, apparently, oil prices will fall to a lower level and stay there for some time before their growth begins.

- You are talking about the boom of the shale oil industry, but recently there is a lot of information that its production has become unprofitable for a larger number of American miners?

There is no concept of "honest" price. From the point of view of the economy, this concept does not make sense

- Indeed, for some manufacturers, due to the geological conditions of the deposits that they develop, production at the current price level becomes unprofitable. But so far there are very few. The range of profitability assessments of this production diverges from 40 to 80 dollars per barrel. It is interesting, however, how quickly this industry adapts to changing circumstances and develops technologies that contribute to the reducing of the production process. In other words, if the comparative cheapness of oil is reflected at the level of the production of shale oil, then this is most likely a short -term phenomenon.

- Analysts love to talk about what, so to speak, the objective price of oil. From this, the Government of Russia comes from this, forming its budget. Is it possible in principle to derive a certain real cost of oil, even approximately?

- The problem is that there is no concept of "honest" price. From the point of view of the economy, this concept does not make sense, since the price of oil depends on several changing values: demand for a product, confirmed oil reserves and technological capabilities for its production and delivery to markets. These and other factors constantly change the cost of oil extracted from the well.