The cost of oil is of great importance to the Russian economy. High energy prices were a period of economic growth for our country. That is why the sharp decline in oil prices today is of interest not only to economists, but also to ordinary citizens. Why is oil getting cheaper and how long will it last? Should we expect any significant changes in 2015?
Why are oil prices falling?
- Falling demand for hydrocarbons due to falling global production.
- Supply growth amid decreasing demand. In addition, another key player in the face of the United States has recently appeared on the oil market. According to experts' forecasts, in 2015 the volume of oil produced will be equal to its largest exporter - Saudi Arabia. As a result, the United States turned from a buyer of oil into a producer. In addition to shale oil, Iranian oil may also appear on the market in the near future, since it was previously publicly announced about plans to lift sanctions on Iran.
Against the backdrop of this situation, traders who trade oil futures are waiting for active action from OPEC (an organization that unites the largest oil exporters) aimed at reducing production volumes. However, each new meeting of representatives of the cartel brings only disappointment. Despite the fact that the budget of many oil-producing countries directly depends on hydrocarbon prices, no one is going to cut production. This is primarily due to the desire to maintain its market share at the same level. In other words, current losses are far less important than the potential loss of oil market share. Russia also has no plans to cut production.
When will oil prices stop falling?
The low oil price may persist for several years, but there is no reason for panic. Over the past 15 years, a lot has been done in Russia with the money earned from the sale of hydrocarbons, so the country has become less dependent on oil prices. Also, we have become less dependent on exports - everything that we previously bought abroad, today we are able to produce on our own. If we recall the crisis of 1998, then the ruble then depreciated by 300%, as a result of which prices in stores increased three times. Now this is not happening, which speaks of the stability of the economy. Of course, the next 1, 5-2 years will not be easy, but Russia has enough opportunities to survive the crisis and cope with any difficulties.
