The Russian government has recognized that the good days of crude oil trading have passed and this will have a very bad effect on Russia’s economy. According to experts, this importance is not only for Russia but also for all the countries whose economy has been mainly dependent on the export of crude oil.
Russian Deputy Foreign Minister Vladimir Kolichev told a TV channel – It is possible that the peak of crude oil consumption has now passed. This poses a long-term threat that revenue from hydrocarbons (crude oil and gas) exports may decline even more than was predicted.
In a report released earlier, the Central Bank of Russia said that if the corona virus continues to hit the world, the price of oil exported from Russia could fall to $ 25 per barrel in 2021. It will be half of today’s price. According to this report, by that time, by 2023, the price of crude in the international market will reach only $ 35 per barrel.
Last month, Russian President Vladimir Putin also said that the demand for crude oil in the world will increase by only one percent every year for the next five years. After that, these demand will start decreasing by 0.1 percent every year.
In the wake of this new condition, Russia plans to reduce its dependence on revenue from oil. Putin said last September that oil will no longer have decisive importance in the national budget. He had said that only one third of the hydrocarbon revenue share would be kept in next year’s budget.
This year, the lockdown caused by the Corona epidemic brought the world’s transportation and industrial production to a standstill. After this, the prices of crude oil fell so much, as it had never gone down before. Due to this the oil producing countries had to cut their production drastically. After the cut, supply in the market decreased. After which the prices recovered. But it has a very bad effect on the countries associated with OPEC (Organization of Petroleum Producing Countries) and Russia’s economy.
There is a fierce dispute between OPEC countries on the issue of how to keep the level of oil production in 2021. But according to some reports, they have agreed to next January. For the remaining months of the year, it is possible to set the production target only on the January formula.
According to these reports, in January, OPEC will increase the daily production of half a million barrels of crude oil. That is, in January, the country associated with this organization will produce 77 lakh barrels of oil. It has been decided that OPEC will meet every month from January, in which its next month’s production target will be set.
The agreement has been described as beneficial for all OPEC countries, but according to reports in world media, many countries did not agree with the decision to increase production. He fears that the price of oil will fall in the international market and he will have to bear its loss. According to the reports published in the Russian media, the production of five lakh barrels per day will increase, Russia’s share in it will be 1.25 million barrels.
Russia estimates that its economy may shrink by 5.5 percent this year due to the Corona epidemic and the decline in the crude oil market. If the situation improves, a slight improvement in the economy is possible in 2021. According to the estimates made, the same situation will also remain for the rest of the countries dependent on crude oil exports.