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The Guardian painted a grim picture of Russia’s future amid falling oil prices, with the Russian government barely holding the fort.
In its piece, Phillip Inman pointed out that without the help of the oil producers’ cartel Opec
the Russian economy is bound to move into free fall.
“The barrel of Brent crude slid 40c a barrel to a fraction below $80, down from $86 a week ago. Five months of declines in the cost of oil have battered oil firms and the leading producer nations,” said the economics correspondent.
The article quotes the Russian finance minister as saying the country is expected to lose “up to $140bn (£90bn) a year because of a combination of plunging oil prices and Western sanctions over the Ukraine conflict”.
“We are losing around $40bn per year due to geopolitical sanctions,” Finance Minister Anton Siluanov told an economic forum in Moscow, quoted by RIA Novosti news agency.
The newspaper reminds its readers that “the European Union and the US have imposed several rounds of sanctions on Russia over its role in the Ukraine conflict, sending the rouble plunging and inflation soaring. The embargoes targeting Russia’s key energy, defence and finance sectors have been compounded by the sliding crude prices.”
Phillip Inman expects the dispute to inflict huge damage on Moscow’s finances, which depend on oil profits for half of its revenues. Embarrassingly, its 2015 budget is based on an oil price of $96 per barrel.
Russia is likely to record capital outflows of $130bn, Inman concludes, further complicating the story.
Earlier, Energy Minister Alexander Novak announced Russia was mulling a cut in oil production in a move to spur prices. And just this Tuesday Rosneft said it had slashed its daily output by 25,000 barrels.
Analysts say the reduction by 25,000 barrels per day is a tiny fraction of the company’s total production which averaged 4.1 million barrels per day over the last ten months but the news is still indicative of the fears that Russia’s energy sector and the government are facing at the moment.
Sources: http://www.theguardian.com
Author: Mikhail Vesely
