Oil is pulling down – Kommersant FM
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The world oil price fell below $80 per barrel for the first time since November 16. January futures for the benchmark Brent commodity on the London Stock Exchange are losing almost 1%. At the same time, quotes have been declining for the fourth day in a row. According to Reuters and Bloomberg, oil contracts are becoming cheaper in anticipation of the OPEC+ meeting, which will be held on November 30. It is expected that there Russia and Saudi Arabia will discuss the possibility of extending the voluntary reduction in oil production and exports into next year.
But what will happen to raw material prices next? And what risks does a price below $80 per barrel pose for Russia? Leading expert of the National Energy Security Fund, Igor Yushkov, is confident that a noticeable drop in prices should not be expected in the future: “Somewhere from mid-October, especially the International Energy Agency, they have been dispelling the idea that the Chinese economy is overheated and that a recession may begin.
On fears that China will reduce its economy and, accordingly, oil imports in 2024, a sell-off has already begun.
From time to time some local stories arise about OPEC+, for example. If the organization reschedules the meeting, it means there is a disagreement. If the deal falls apart, then everyone will produce to the maximum, resulting in a huge oversupply. Then the price of oil will collapse, so it is better to sell futures now and take a profit than to suffer a loss later.
These ideas that China has problems, and OPEC+ supposedly has some insoluble contradictions, are pushing the price down. With OPEC+, of course, there are some rough edges, and the dialogue, let’s say, continues, but I don’t think anyone is talking about the collapse of the deal. They just want to go into the meeting with a ready-made solution, so that nothing can be discussed at it.
I would still bet that the price of oil will adjust somewhat in the future, and we will return to the range of $85-95 per barrel. Until the meeting itself, the cost will likely be in a fever. Every rumor will push her up and down. We will see price fluctuations depending on various factors. There is no reason that would only lower or only increase quotes, so traders will cling to every small information lead.”
The State Duma and the Federation Council previously adopted the federal budget for next year. It is expected that its income in 2024 will exceed 35 trillion rubles. According to the speaker of the lower house, Vyacheslav Volodin, more than 67% of these revenues do not depend on oil and gas. A fall in Brent prices below $80 per barrel may have a minor impact on the Russian treasury, says Andrey Kochetkov, leading analyst at Otkritie Investments. However, everything will depend on the speed at which prices fall, he continues:
“If we talk about a price of $80 per barrel, the Russian budget does not benefit much from this, but it does not lose much either, since we usually set the price lower – around $60-65. That is, from this point of view, the income is quite normal. Moreover, the forecast exchange rate of the ruble for this year was much lower than we are now observing.
By and large, we are in a very comfortable situation – a barrel of oil costs more than usual, and, accordingly, ruble budget revenues do not suffer.
If the price falls lower, it won’t be very pleasant, because we still have some kind of small discount to world prices. And the less oil costs, the less income the Russian budget and Russian companies will have. But, probably, we are still talking about stabilizing prices around current values, and by the end of the year, rallies in the oil market occur more often than in the stock market.”
The share of oil and gas revenues in the Russian budget, meanwhile, fell to a 16-year low. According to the Accounts Chamber, from January to September the industry provided almost a third of treasury revenues. In the same period last year, the figure exceeded 40%. In absolute terms, such revenues decreased by one and a half times, to 5.5 trillion rubles.
Everything is clear with us – Telegram channel “Kommersant FM”.
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