The cost of oil, like other major energy resources, has a direct impact on economic processes in the world. A significant drop in oil prices was a boon for the countries-consumers, and almost a catastrophe for exporters. But is everything really sad? Let's find out what threatens the fall in oil prices in Russia.
Reasons for the fall in value
First of all, let's look at the main reasons for the fall in oil prices. After all, only having determined the root causes can we predict the further course of events, and their consequences.
It's no secret that in 2014 there was a sharp drop in world oil prices, which, by and large, continues to this day, giving way to short periods of a slight increase in value. This phenomenon is already acquiring a long-term nature.
The main reasons for the fall in oil prices are called by experts:
- drop in demand;
- shale revolution;
- fighting in the Middle East;
- market speculation;
- investors disappointment;
- the strengthening of the dollar.
Each of the above reasons has a different level of influence on the fall in the cost of black gold, but at the same time they all contribute to this process.
Detailed analysis of the causes
The decline in oil demand is primarily due to the crisis that is now happening in the global economy. This means that the level of production, and hence the consumption of petroleum products, is reduced. This primarily concerns the slowdown in the economies of the EU and China.
The shale revolution has also contributed to the fall in oil prices. Advanced technologies that allow the production of shale oil, previously almost inaccessible, have led to an increase in supply on the market, which cannot but affect the cost reduction.
It would seem that the fighting in the Middle East, on the contrary, should contribute to higher oil prices. Actually, this was the case in most previous military conflicts. But this time, various groups of militants, in need of living money, began to sell oil produced in their territories at dumping prices. Of course, this fact affects the fall in oil prices, although it is far from the main factor.
Market speculation can affect the fall in oil prices in the short term. In the long run, this factor still plays an insignificant role.
In previous years, the price of oil has skyrocketed. Investors massively bought oil futures. But as soon as the price began to fall, they began to try as quickly to get rid of them, which, in turn, added oil to the fire.
Of course, the objective strengthening of the dollar plays a significant role in the fall in oil prices. After all, world quotes are formed precisely in relation to the American currency, and if it rises in price, then the rest of the assets fall in price.
Some experts add political versions to the above list. For example, one can often hear statements that the fall in oil prices was caused by the collusion of the United States and Saudi Arabia against Russia. But these versions are of a conspiracy nature and are not considered by serious analysts.
Timeline of the fall
Over the past decade, the world has become accustomed to high prices for black gold. So, in 2008, the price of brand oil Brent peaked and approached the mark of 150 dollars per barrel.True, after the onset of the global financial crisis, it fell significantly, but then again went into growth and until mid-2014 exceeded $ 100 per barrel.
But it was from this moment that her new landslide began. By the end of 2014, its cost was already around $ 60. And in February 2016, the price reached a minimum, dropping below $ 30. However, at present, the price of oil has again begun to show growth, but it is difficult to say whether this is a temporary phenomenon or a long-term trend.
Forecasts
Let us now consider the basic forecasts of specialists on how the price of oil will behave in the near future.
Among analysts there is no unequivocal opinion on this matter. Some of them believe that the price of black gold at $ 30 per barrel is the bottom. On this, the fall in oil prices will stop, and they will go up sharply.
Other experts, on the contrary, argue that the price is quite capable of breaking new records. The most daring of them say that even the cost of $ 20 per barrel may not be the limit. Small oil price increases that periodically occur, experts who share this point of view, are considered temporary.
Therefore, in the present situation, it is rather difficult to give an accurate forecast about the further behavior of black gold quotes.
Cost Implications
Now let's find out what threatens the fall in oil prices for the global economy as a whole and for individual countries. This is very important for understanding the possible economic consequences of this process. Let us dwell on what threatens the fall in oil prices in Russia.
First of all, you need to understand that on world market There are two types of oil countries: exporters and importers. The former mainly sells mined black gold, while the latter buy. Moreover, it is not necessary that those countries that buy oil do not have its reserves in their territories. Thus, the United States and China occupy, respectively, the third and fourth place in the world in terms of oil production. But, despite this, they are mainly importers of this product, since production volumes are insufficient to cover the needs of these powerful global economies.
Based on this, we can conclude that for exporting countries a further decline in the cost of oil is unprofitable, but for the states that buy it, this is just right.
In addition, it should be noted that low energy prices stimulate the development of production. World crisis slows down the development of economies, thereby reducing oil demand. And that means its price. When the price reaches the minimum size, it already, on the contrary, favorably affects the development of industry. It is gaining momentum and requires more petroleum products. This state of affairs leads to an increase in oil prices. This is how the law of economic equilibrium acts.
The economy of all oil-exporting countries, to one degree or another, is negatively experiencing a fall in black gold prices. But in some states it is fully oriented towards the export of this raw material, while in others there are other significant sectors of the national economy. Naturally, the first group of countries is experiencing a drop in oil quotes in more difficult conditions than the second. These states primarily include Venezuela, Saudi Arabia and other Persian Gulf countries.
The importance of the oil industry in Russia
Revenues from the oil industry make up a substantial part of Russia's budget. Although, the share of revenue from the sale of oil and gas abroad does not exceed 50% of GDP, as some believe, but only about 16%.
But it must be borne in mind that many sectors in other sectors of the economy are financed precisely from "oil" money. Thus, the financing of other sectors of the economy, and hence their profitability, directly depends on the amount of revenue from oil sales.
As you can see, the real volume of indirect influence of the oil and gas industry on the entire Russian economy really exceeds 50%.
What awaits Russia?
Now let's find out what the fall in oil prices means for Russia.
As for any country where a significant part of the economy relies to one degree or another on the oil industry, a further decline in the price of black gold or stabilization of its quotations at a low level does not bode well.
First of all, we should expect a decrease in GDP. How much it will decrease depends on how serious the fall in oil prices will be. Why should you expect such a scenario? First of all, because a significant part of the country's GDP is occupied by direct revenues from the sale of oil, as well as revenues in those areas of business in which funds received from the sale of black gold are invested.
In addition, Russians should be prepared to reduce budget revenues. It is no secret that a significant part of them is made up of funds from the sale of oil and oil products, as well as taxes on these types of goods.
With a further decline in oil prices, the ruble will most likely continue to fall. This, in turn, will stimulate inflation in the country, which means a decline in the standard of living of the population.
What to do?
But there is a way out of any, even the most difficult situation. Yes, this method of solving the problem is not simple and requires much more time than we would like.
In order for Russia not to face crises in the future caused by falling oil prices, it is necessary to diversify the economy, that is, increase the share of revenues from industries not related to the extraction and sale of minerals. It is necessary to take into account that even if this time oil prices rise, this does not mean that after a certain period of time they will not fall again. So, in any case, sooner or later the problem will have to be solved radically.
Crash or new features?
Thus, the fall in oil prices in the country's economy causes many negative phenomena, which can lead to rather disastrous consequences. At the same time, the situation in the oil market is an additional factor that forces the government to take the path of modernization, reducing the share of revenues from the sale of natural resources in the country's GDP.
If in the conditions of the high cost of black gold such a situation could freeze for many years, then the collapse of oil quotes forces to make radical decisions that can lead to significant economic growth.
