Oil prices this year managed to stabilize around the $55 per barrel mark, and in recent months even went higher, besides, prerequisites for further growth were created. So what will the price of oil be next year?

Experts are increasingly voicing price forecasts in the range of $50-60 per barrel, that is, in fact, they do not expect any changes.

However, recent years have clearly shown that fluctuations in the oil market can be very strong, often even reminiscent of a tsunami.

President Vladimir Putin also announced his forecast last Friday. It also does not expect major changes:

Vladimir Putin

"We believe that in the second half of 2017, excess oil will leave the market and oil prices will stabilize. We expect that they will stabilize at today's level."

The President does not hide that he relies on the forecast of the Ministry of Energy. In general, everything looks logical: if OPEC and non-OPEC countries fulfill their obligations to reduce production, excess oil will leave the market. Of course, there is also the US shale sector, which is likely to increase volumes, but not so much, so there are prerequisites for stabilizing oil prices, but they are limited for further growth, since then a new shale boom will begin in the US.

As Minister of Energy Alexander Novak rightly noted, there is no escape from technological progress.

On the other hand, we note that the financial departments of the Russian Federation, in particular the Ministry of Finance and the Central Bank of the Russian Federation, do not want to succumb to an optimistic mood and calculate their forecasts based on an oil price of $40 per barrel. This is a rather important point, because in the past we often heard the phrase "oil prices will recover", but in the end it turned out the other way around, which in turn turned into serious problems for the economy.

In the short term, the likelihood of an increase in oil prices is still preserved. Many respected experts expect the price of a barrel of Brent blend at $58-60. However, from a technical point of view, the picture remains uncertain.

We see that prices have not been able to break through the upper boundary of the expanding formation, so there is still a possibility of a price decline from current levels. Apparently, it is worth waiting for January and see how OPEC members will fulfill their obligations to reduce production.

If there is even a single hint that the deal will fail, speculators will not fail to take advantage of this and start the game for a fall. Producing countries should understand this very well.



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Recently, another bearish rally has begun in the oil market. The cost of the Brent brand fell by another 10% in just a week and crept close to another psychological level of $45 per barrel. This time, the reason was reports that Iraq sent tankers with "black gold" worth 22 million barrels to the United States - this is slightly more than the daily consumption rate in America. At the same time, Saudi Arabia is expanding its presence in the European market - the kingdom recently carried out the first oil supply to Poland, which by the way is a traditional importer of Russian hydrocarbons. In addition, the day before, the Saudis also extended their discounts to Europe as well. Nevertheless, it remains incomprehensible - why did the OPEC countries keep the price at such a record low for so long?

One gets the feeling that Saudi Arabia has launched an all-out war not only against American shale oil producers, but also against non-OPEC oil-producing countries in general. I already wrote a study on this one, the conclusion from which is more than obvious: the real factor in price pressure is not a supply surplus in the world market of 2-3 million barrels per day, but psychological pressure from the Saudi monarchy. That is, investors are not so much concerned about the fact that supply actually exceeds demand, but rather that OPEC is ready to sell its oil on the cheap. Now no one even stutters not only about the return of prices to $100 per barrel, even in the very long term, but even about $60, few people talk.

However, two facts are worth noting. Firstly, this whole story seems very murky and it is unlikely that only the purely economic interests of Saudi Arabia and other Gulf countries are involved here. Most likely, the Saudis are thus trying to put pressure on their main competitor in the region - Iran. Secondly, in general, Saudi Arabia's strategy of dumping on the world market is beginning to bear fruit - the production of heavy and shale oil (especially in the United States) has indeed begun to decline following the fall in the number of drilling rigs. The total production of “black gold” in the United States has already fallen by almost 600 thousand barrels per day from its peak levels this year, and the local Ministry of Energy predicts a decline in production by more than 100 thousand barrels in November.

Based on these facts, the following conclusions can be drawn. First, there are no fundamental grounds for oil at $45. The only fundamental reason for such low energy prices could only be the world economic crisis, which does not exist. Secondly, if there are no fundamental factors of pressure on prices, then there are factors of a different kind, namely, speculative, political and strategic ones. Saudi Arabia seeks not only to oust competitors from the global oil market, but also to secure a solid share in the long term. This strategy was used in the second half of the 1980s. Then oil collapsed almost 4 times - from 35 to 9 dollars, and prices did not rise above the maximum levels until 2000, but in the end, for a certain period of time, OPEC really secured a fairly strong market share.

Third, one can hardly expect that prices will begin to recover in the coming quarters and even years. At least until the end of 2016, the cost of "black gold" is unlikely to exceed $60 per barrel, and may even remain below $50 for some time. In this regard, in 2016, a further reduction in oil production by non-OPEC countries is expected. Fourth, all this will subsequently have an extremely negative impact on the balance of supply and demand, since investments in oil production will already become too unpredictable and less profitable. Already in the middle of 2016, a surplus of oil on the world market may turn into a deficit, although even in this case, one cannot hope for an increase in quotations - as I wrote above, the main factor in low prices now is not the actual balance of supply and demand, but speculative pressure due to for the actions of Saudi Arabia. And finally, the fifth - in the light of such price dynamics, one can hardly expect the emergence of new large players in the market, such as the United States. Incidentally, Canada, with its large-scale reserves of oil deposits, is also unlikely to actively participate in the world oil market at current prices.

As a result, we can draw a generalizing conclusion about the following - in 2016 we can expect the preservation of the unenviable state of affairs in the global oil industry. Due to low prices and weak demand in key regions (particularly in China and the Eurozone), there is no hope for support from demand. In this regard, next year oil prices will continue to fluctuate in the corridor of $50-60 per barrel, however, it is unlikely that prices will remain below $50 for more than 2 quarters, as this is fraught with risks for both producers and consumers (I want to remind that the production of shale oil alone in the United States exceeds an average of $60 per barrel - taking into account the costs of storage, transportation and sale, and in total up to 25% of all world oil production at current prices is unprofitable).

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Key exporters have agreed on terms for stabilizing oil production, which is reflected in the oil price forecast in December 2016. Experts expect a gradual increase in oil prices in the near future, but the compromise reached will have little effect on the rise in the price of "black gold".

Half solution

The decision of exporters to stabilize oil production allowed oil prices to approach the maximum values ​​of the current year. In the short term, the average monthly production of raw materials in the OPEC countries will return to the range of 32.5-33 million barrels. In September, this figure reached 33.64 million barrels, which became a historical maximum. In addition, Russia is also ready to join the decision of OPEC members, which increased the growth of oil prices.

The dynamics of August and September indicate a gradual reduction in oil reserves, even with the current volumes of crude production. According to IEA analysts, in August, the total reserves of raw materials decreased by 10 million barrels. This trend continued in September, which indicates the approach of balance in the "black gold" market. In addition, IEA representatives expect global oil demand to grow by 1.2 million barrels per day in 2016.

Experts note that the decision to reduce the production of raw materials will have a limited impact on oil prices. An increase in oil prices will lead to the resumption of active work of shale projects in the United States, which will be reflected in an increase in supply. As a result, the cost of "black gold" will resume falling.

In addition, competition between the main oil suppliers can at any moment go into an acute phase. Representatives of OPEC, primarily Saudi Arabia and Iran, do not intend to give up market share. In such circumstances, the agreements reached to reduce oil production may remain unfulfilled.

Another factor that affects the dynamics of prices are possible interruptions in the supply of raw materials. First of all, supplies from Libya and Nigeria remain under threat. New conflicts in the territories of these countries will lead to a short-term increase in prices.

Experts admit two scenarios for the development of events in December this year - maintaining prices at the current level or a moderate increase in cost.

December forecasts

In December this year, prices for "black gold" will remain at the current level, experts say. Representatives of the IMF expect the quotes to stabilize at the level of 50-51 dollars per barrel, which is caused by a gradual decrease in supply.

The head of the IEA, Fatih Birol, admits an increase in the cost of "black gold" to 60 dollars per barrel. However, oil quotes will not be able to stay at this level. After additional deliveries of American shale oil, prices will return to the range of 50-55 dollars per barrel.

The factor of shale oil may lead to lower prices, says Sberbank CIB representative Valery Nesterov. The cost of "black gold" is above 50 dollars per barrel. will allow US oil companies to quickly increase their production of raw materials, which will lead to a subsequent reduction in prices.

APEKON specialists predict a gradual increase in oil prices. By the end of the year, the cost of oil will fluctuate in the range of 55-57 dollars per barrel.

Decrease in oil prices below 50 dollars per barrel. remains unlikely. To implement this scenario, a combination of extremely negative factors will be required - continued growth in oil production against the backdrop of weak demand. Such a combination of circumstances allow analysts Fitch, who do not exclude the next stage of falling prices to 45 dollars per barrel.

One of the key factors that will determine the dynamics of demand remains the performance of the Chinese economy. The steady growth of China's GDP will be a positive signal for the market and will provide additional price growth. The emergence of new difficulties for the Chinese economy will have the opposite effect.

The cost of oil in the short term will remain at the level of 50-51 dollars per barrel, which is recorded in the most likely forecast for December 2016. Price stabilization will be facilitated by the reached agreement on reducing the level of oil production. Some experts allow the growth of quotations to 55-57 dollars per barrel. In addition to lower production, higher prices will be associated with increased demand.

Fitch analysts do not rule out a decline in quotations to $45 per barrel if the balance in the black gold market is not achieved.

«Expert Online» December 28, 2015. The variety of oil price forecasts is amazing, they differ by an order of magnitude - from 10 to 100 dollars per barrel. It is quite logical to ask for a comment from a specialist who gave more accurate forecasts in the past. We asked for comments on the situation in the commodity and financial markets scientific director of the research center "Neoconomics" Oleg Grigoriev. Interviewed by Dmitry Gavrilenko

No one doubts the dependence of the Russian budget on oil prices today. Under such conditions, the lack of a correct forecast of oil prices cannot but be a risk factor for long-term economic planning. But the variety of oil price forecasts is amazing, they differ by an order of magnitude - from 10 to 100 dollars per barrel. The largest Western banks during 2015 were forced, retroactively, to revise their oil price forecasts for 2015 downward. Therefore, it is quite logical to turn to a specialist who gave more accurate forecasts in the past for a comment. We asked the supervisor of the research center "Neoconomics" to comment on the situation in the commodity and financial markets Oleg Grigoriev.

Oleg Vadimovich, in your forecast for 2015, you said that Russia expects a decline in GDP by 5%, did not see any prerequisites for the strengthening of the ruble, but considered a drop in the exchange rate to 80 rubles per dollar as an unlikely scenario. You advised to forget about oil at $100 per barrel for a long time, seeing the price maximum for 2015 at $80 per barrel and a minimum of $40 with the possibility of a short-term drop in the price below $40. Even earlier, during the acute phase of the 2007-2009 crisis, after oil prices from $140 to $40 per barrel, you predicted a short-term increase in oil prices, caused by the US Federal Reserve's quantitative easing program, to the level of "100 and above" and then falling to the level of 2009. How do you assess your past forecasts today, did they fully coincide with your model of the economy?

It is impossible to say that everything happened exactly as I expected - things happened that were unexpected for me. As for our own model, which we use today, its main principles were formulated two and a half years ago, and began to be fully used only a year ago. Previously, there was only a general understanding of economic processes and we had to pay more attention to the opinions of other specialists in certain sectors of the economy, evaluating them from the point of view of our understanding of the economy. When we weren't using the model yet, we had a not-so-good moment at the end of 2013, when there were very strong arguments within our team in favor of an increase in oil prices, and in favor of a recession. The only thing was clear that the price of oil would not stand still. I believed that prices would fall, but I compromised, as the arguments in favor of rising oil prices were very strong.

What kind of arguments were they?

There was a lot of free money in the world that had nowhere to go. The banking sector and corporations have huge funds in their accounts. The Swedish financial sector is choking, where there is a huge influx of euros and they do not know what to do with them - there is a negative rate on the interbank market. From my point of view, in the conditions of a deflationary crisis, this money supply is hoarded (saving - Expert). But the argument against hoarding was the thesis that the main money is with institutional investors, that is, with investment funds and corporations. For example, any investment fund is simply obliged to invest, its declaration says that no more than 5% can be in the form of cash. In the same way, corporations cannot remain in cash, they will be asked by the board of directors, shareholders, what they were doing. Therefore, in 2013, we gave a forecast that oil could go both “up” and “down”, because we knew for sure that prices would not remain stable. We have learned from this lesson and no longer compromise, solving the problem to the end.

As a forecast of the price bottom, we constantly heard from oil market analysts the wording “it can't be lower”. At first, it could not be below 80, then below 60, 50, 40, and now, as it turns out, below 36. Where do you see the price bottom?

Yesterday (December 22 - Expert), we had a big annual meeting on the forecast for the year. We think in trends, not bottom levels. In principle, especially in the current conditions, it is quite possible that the price will fall to $20 per barrel. But this is very short-term and outside the trend. The general trend is $30 per barrel and will fluctuate within the range of $30-35 within six months.

Tell me, was the statement of the President of Kazakhstan Nursultan Nazarbayev, dated August 19, 2015, about the corridor of oil prices of 30-40 dollars per barrel, dictated, by any chance, not by your consultation?

It's hard to say for sure, but, oddly enough, although we don't listen to much here, we have very close contacts with the Kazakh government and staff of the presidential administration of Kazakhstan.

Some oil companies claim the cost of oil production at $5 per barrel. What prevents oil prices from dropping to $10 levels until reserves of higher-cost oil already produced are exhausted, while oil fields below $10 cost will continue to produce?

It is difficult to say what is meant by "cost", most likely it is the operating cost. When there is already a finished well, where the rocking chair is located, the entire infrastructure has already been built, then this is probably possible. But if we count all the costs of developing the field, the cost of building infrastructure, and transportation costs for transporting oil, the cost of Russian oil should be added to the cost of Russian oil at least $10 per barrel. As long as there are enough explored deposits, it is possible even to slightly increase production due to the intensification of production, which is what we are doing now. But in a year, a maximum of two or three, oil production will decline. New deposits, starting from a cost of around $30, are unprofitable to put into operation. Therefore, a drop in the cost of oil below $20 is possible only for a very short time - a month, a maximum of two. Even at current prices, Canada dropped out of oil production, although the volumes there were not large. Platforms are already stopping in the North Sea and the Brazilians are stopping their offshore platforms.

The latest news from the oil market on the "bulls" and "bears" in the oil market, in terms of their shares and other indicators, suggests that the "bulls" in the oil market still remain and they are betting on the second half of the year. And this coincides with our assessment of the beginning of a price reversal in the upward direction. The upward trend will focus on a maximum of 60, but most likely at 50 dollars per barrel. The factor of shale oil will not allow it to reach values ​​in the region of $100. Shale oil production is easily curtailed during periods of low prices, but also easily unfolds during periods of rising prices.

There has been a lot of talk about shale oil being unprofitable at $60/bbl, but are we seeing continued production at $35/bbl WTI?

Firstly, it fell by 400 thousand barrels per day, and secondly, it is obvious to me that today the cost price for most shale deposits is $35-40 per barrel. Everyone is using data from two years ago on the cost of producing shale oil. During the use of this technology, it was possible to significantly reduce the cost of shale mining. With a cost of $40 plus transportation and a small margin, we're back on our $50, $60 per barrel trend. This does not mean that exactly in the second half of 2016 there will be exactly 50, but we will move towards this price.

Your forecast was exclusively about the "oil" factors of price changes. But if we assume that the US Federal Reserve decides on another quantitative easing program, will this have a significant impact on the growth of oil prices?

The price will not rise to $100 even with a new quantitative easing program. Unlike 2009, when this happened, today we have the factor of the same shale oil. Huge investments have been made in this industry and today the supply of oil can be instantly increased.

Oil ceased to be "black gold"?

In the US energy mix, shale oil makes up 5% and wind energy makes up 5%. There is a lot of talk about lifting the ban on oil exports from the United States, but they do not say that at the same time huge funds are provided for the development of wind, solar - "clean" types of energy. Subsidies for alternative energy sources are “tied” to the amount of profit that US oil companies will receive from oil exports. Although these energy sources are still subsidized by the state, subsidies are getting smaller and smaller. Due to the mass production, the cost of equipment is falling and the cost of the obtained alternative energy is almost comparable to the traditional one. The factor of alternative energy sources could even have a macro effect on the German economy. In the autumn there was a slight decline in the industry, which is explained by the fact that the summer was sunny and windy, and the autumn turned out to be cloudy and calm, which caused a decline in the development of alternative energy sources. The country's GDP begins to depend on these factors.

Are electric vehicles becoming a significant factor influencing the cost of oil?

I think that the factor of electric vehicles will not start to influence today and not tomorrow, despite the gigantic progress in this area. From the point of view of the economy, the electric car has not yet reached an acceptable level. But we, as an energy superpower, must take this trend into account. After all, the development of the Arctic shelf is as distant a prospect as an electric car. And their intersection can play a trick on us if we make investments today, and then it turns out that we made them in vain. Shale mining has also been an expensive toy for a long time. It was not Barack Obama who supported shale mining, it was under George W. Bush. By the way, even before the crisis of 2008, Expert magazine published an article in which it showed the dynamics of oil drilling in the United States, their rapid growth. There was no mention of shale, then no one was talking about it yet. Since the author assumed that we were talking about traditional drilling, he therefore believed that the effect of increasing oil production would work immediately and there would be a decrease in oil prices. Now we understand that it was drilling in shale, and everything was very difficult - initially, drilling was often carried out in vain. It was a great lesson for me to pay attention to any oddities in the global economy.

But Europe does not produce shale gas?

As long as Europe has a lot of money, it can afford to flirt with the "greens", close nuclear power plants and refuse to produce shale gas. But shale gas is produced in the US, the US is ahead of Russia in terms of production, and the cost of gas in the US market is about $70 per 1,000 cubic meters. I understand why we have a lot of experts do not pay attention to this, of course we really want Russia to be good, but let's distinguish reality from what we want. If I say that oil will be 200, it will not cost 200 because of this, even though I will repeat this a hundred times. And if we tell each other that shale is a bubble that will burst, then nothing good will come of it. When we advise firms, we start by explaining to owners to be "paranoid" and regularly ask themselves "why do I still exist?". When running the country, I think this organized "paranoia" should also be present. If the cost of oil is 100, then you need to understand why 100, that this is not just a law of nature, what made up these 100 dollars. And understand that if these factors are not met, then the oil will not be 100, but in a completely different way. The management of a separate firm differs little from the management of a separate state.

Is the forecast for the gas market, as well as for oil, also negative?

The gas market is a special market. The United States is preparing to supply gas for export, and probably will supply it, but this will not happen quickly. They have no infrastructure, it has yet to be built. This is a rather expensive infrastructure for liquefying, transporting and diluting gas. If Europe starts producing shale gas, then we can focus on the price level in the US, adjusted for less successful fields. In addition, in Europe, all the land has long been divided and there are no such empty spaces as in the United States, which will also lead to an increase in the cost of production. A possible guideline is $200 per 1,000 cubic meters. Although it is unlikely to drop significantly below $200 in Europe, the long-term trend is a decrease in the cost of gas. When gas became possible to transport, it began to be massively found. It is possible that earlier these deposits were known, but they did not know what to do with this gas. A common mistake of a monopolist is to keep the price too high and force the buyer to look for alternative sources of goods. Saudi Arabia created OPEC, capped oil production with quotas, and enjoyed high prices for a while. The first bell rang in the mid-80s - the whole world began to look for oil and prices went down. Shale oil is a confirmation of our theory about the technological division of labor. We say that the technological division of labor is aimed at combating natural limitations. There was a factor of natural limitation of traditional oil fields, and due to a higher level of division of labor, shale oil appears and removes this natural limitation. Just like solar and wind energy, these are more high-tech industries and, accordingly, with a higher division of labor, which are also aimed at removing natural restrictions and monopolies. Monopoly is broken by increasing the level of division of labor. For me, this is an example confirming the work of our economic theory.

What prevents other economists who, seeing the same processes as you, at the same time constantly make overestimated forecasts for the cost of oil?

Oil is so mythologized...

How's the gold?

I would say more than gold. It's quite a long story, starting with "The Limits to Growth" Dennis Meadows(report to the Club of Rome in 1972, based on the thesis of exhaustibility natural resources– Expert), science fiction about it, Hollywood movies or the Australian movie Mad Max. Perhaps this cultural environment is having an impact. I can't explain this with anything other than the over-mythologization of the oil factor.

In gold, which is now worth $1,070 per troy ounce, what is the proportion of mythologization?

It is very difficult to say this because it is not only a mythologization, but also a religion. The religion of billions, if you take into account the Chinese and Indian population. Mythologization turns into real demand.

Does it make sense for the Central Bank to keep part of its reserves in gold?

Here is an example, now Nicolas Maduro (President of Venezuela - Expert) is forced to sell gold reserves with financial losses. And what if we enter the market with the sale of gold, or China, which is losing almost 100 billion dollars of gold and foreign exchange reserves a month? It will crash the market. It is enough to look at Venezuela and ask how much this possession of gold gave them? Why did they do it?

Are other commodities also on a downward trend?

Producer prices in China have been negative for the past three years. Only consumer prices are supported by rising wages. Europe is struggling with real deflation. Everyone looks at oil, but look at the cost of copper, nickel, at the level of their decline. As for aluminum, I don't understand how RUSAL works if they announce an average cost almost twice as high as current prices. As long as there is a global deflationary crisis, the fall in commodity prices is inevitable. There will be a boost cycle interest rates The US Federal Reserve, which will inevitably cause massive bankruptcies of manufacturers and falling commodity prices. After that, I expect a new program of quantitative easing.

Apart from the belief that the rate should be positive, is there a rationale for raising it?

They are guided by their cycle model. The cycle model says that someone must go broke, resources must be freed up, and the remaining highly efficient producers must receive these resources, and then growth will be sustainable. Everyone understands what he did Ben Bernanke in a crisis and why he did it. But this did not allow them to go bankrupt, in their opinion, inefficient. The Fed actually says - "we warned you, gave you 7 years, and now whoever did not hide - we are not to blame." But the whole problem is that the majority of companies, over 80%, are at risk. Most companies have enough margin of safety for another one or two rate hikes within six months, after which the process of bankruptcy will take on a mass character.

We have a deflationary crisis of the entire world socio-economic model, and I adhere to the view that it will go on for a long time, slowly. And we will go down in small steps. Although many say no, everything will “explode”. We must pay tribute to the leadership of the Fed, Ben Bernanke, he is actually a great man - he saved both the world economy and the American one.

Many still cannot understand how the emission carried out by Ben Bernanke did not cause inflation?

I'm just re-reading The Accumulation of Capital. Rosa Luxembourg, where she first tried to show the difference between financial and consumer money. An increase in the volume of consumer money can cause severe inflation. The quantitative easing program is an increase in the amount of money in the financial sector. The world economy was then on the verge of a severe deflationary asset crisis, and emission prevented this from happening.

What is happening with the Russian financial sector today?

For 11 months of 2015, the Russian banking sector showed 500 billion rubles of profit and 200 billion rubles of loss. That is, the total profit is 300 billion rubles. Now we take Sberbank with a profit of about 300 billion rubles, remove it from this combination and get the result - the rest of the banking sector has worked to zero. The banking sector has no areas in the real economy where it could make a profit. The population has long been indebted and is even starting to get a little out of credit. With a 10% drop in real incomes in 2015, the population is unable to increase consumption. The drop in retail amounted to 11.3%. It would be possible to earn on export, but apart from raw materials and products of the first processing stage, we export almost nothing. Due to the devaluation, metallurgists breathed a little easier, the chemical industry and the production of fertilizers began to feel better. The bank only takes its share of what the real sector earns, respectively, if the real sector has nothing to earn on, then the bank too.

Does it make sense to invest in agriculture, which should have been successfully developed thanks to retaliatory sanctions?

Look at the balance sheet of the Russian Agricultural Bank, which would have been bankrupt if not for the constant injection of capital from the state. Nowhere in the world is agriculture a profitable sector, it is dated by the state.

What is your forecast for the Russian banking sector?

We have never had full supervision in the banking sector. If we analyze bank closures, what do we see? We have two categories of license revocation - either a "laundering office" or bankrupt. If the “laundering office” closes, then the balance sheet is still analyzed, and large holes are revealed in it. And if the license is revoked due to bankruptcy, then the hole in the balance sheet sometimes turns out to be many times larger than originally expected. If we take any bank with good reporting and check what will be revealed there, we cannot even imagine. The regulator forgave a lot of things to Russian banks during the crisis of 2008-2009, and a lot of “garbage” has remained on their balance sheets since then. Then the task was simply to survive for the Russian financial sector. Therefore, I am sure that the Central Bank will continue to "clean up" the banking sector at the same pace - up to 100 banks a year. Systemically important banks, of course, will bail out at any cost, while the rest are at risk. This year, many banks still lived on reserves, but next year, especially against the background of the ongoing economic downturn, and the real sector will fall by another 2-3%, it will become even more difficult for them to survive. The situation in which it is impossible for banks to earn money is pushing their owners to withdraw assets.

How do you see the equilibrium exchange rate of the ruble at the current oil price?

The Central Bank completely took control of the situation in the foreign exchange market, building an ideal system based on the current situation. True, this happened after the situation got out of control of the Central Bank last year. Initially, the Central Bank was interested in a slight devaluation and did not intervene, and when it decided to intervene, it was too late. Today's ruble exchange rate seems to me more or less balanced. Banks have very large foreign exchange positions, they practically do not attract foreign currency deposits, for which rates have dropped sharply. If oil prices drop to $30 per barrel, we will see the ruble exchange rate no more than 80.

Could a deeper devaluation of the ruble become a driver for economic growth following the example of 1998?

Then there was a different situation, except for the quadruple devaluation, the growth factor was free production capacities, which are not there now. Today, even with the most significant devaluation, we will be forced to purchase equipment for foreign currency and it is not known whether this machine will pay off in our market. Something can develop, but it will not be massive, as in 1998. We work with mainly medium-sized companies, all companies have a birth date of 1998-1999. The rise of 1998 was the perfect confluence of several circumstances. Half of the entrepreneurs went bankrupt during the 1998 default due to non-payments. But the rest, which managed to be paid under contracts, including bankrupt colleagues, ended up with money, production capacity and growing demand. By 2003, the effect of the devaluation came to naught. Then oil prices began to rise, the real estate bubble began, consumer lending developed, and foreign capital began to flow. But this was another driver of economic growth - not a devaluation one.

That the Russian economy is in for a difficult year. This is due to the fact that it is very dependent on oil.

The average oil price in 2016 was $43 per barrel. This is far from what it was two years ago, when it cost more than twice as much. According to the Russian Federal Customs Service, oil export revenues account for 26 percent of total export earnings. For an economy where exports account for almost 30 percent of GDP, this is a very significant amount.

This problem manifested itself in a sharp increase in Russia's budget deficit in 2016. In 2015, the budget deficit was $25 billion, or 2.6 percent of GDP, according to the Russian Ministry of Finance. But in September, the head of this ministry said that the budget deficit forecast for 2016 was revised upwards. By the end of the year, it could reach 3.7 percent of GDP.

Therefore, Russia climbs into its reserve fund. It also cuts social spending and pension benefits.

We do the math

How many "pens" have been broken, how much ink has been used up on the topic of rising oil prices since OPEC agreed to cut production on November 30! Let's leave aside the fact that the price of oil has not jumped up. (The price of Brent at the close of trading on December 14 was only 11 percent higher than on November 28).

Instead of making assumptions about market fluctuations, it will be more interesting to understand what exactly the price of oil is significant from the Russian point of view.

Russia's Finance Ministry said earlier in the year that the country would have a deficit-free budget if the price of oil reached $82 a barrel. But we don't trust politicians' statements, so we decided to see if we could come up with the same numbers (or better ones) if we made our own calculations.

Context

Tillerson's conflict of interest over Russia

Vox 12/15/2016

Russia Controls Global Oil Deal

Die Welt 12/13/2016

Who buys Rosneft shares?

The Wall Street Journal 08.12.2016

Norway earns billions on Putin's game

12/06/2016
Russia publishes information on oil export earnings in metric tons and in dollars. According to the Russian Federal Customs Service, from January to October 2016, the country exported oil worth a total of $59.6 billion. This is about 213 million metric tons. Converting metric tons to barrels of oil is not easy. Each brand has its own density. The generally accepted conversion factor from metric tons to barrels is 7.33 (data from the BP Statistical Review).

Analyzing Russian export statistics in this way, two conclusions can be drawn. First conclusion. In the first 10 months of 2016, Russia produced almost five percent more oil than in the whole of 2016. And this means that this year it needs to sell more oil than last year. Second conclusion. It is estimated that Russia will export about 5.13 million barrels of oil per day this year.

Go to zero

Now we have to move on to assumptions. Russian statistics show that in 2015 the country exported $76.7 billion worth of oil at an average price of $41.85. With data only for the first 10 months of 2016, we are forced to make assumptions. But let's proceed from the fact that in November and December of this year, Russia exported in monetary terms the same amount as the average for the first 10 months. (Actually, the amount may be slightly higher). It turns out that the total amount of Russian oil exports in 2016 will be approximately equal to 71.52 billion dollars.

We also have to take into account recent comments by the Russian energy minister indicating that Moscow has, albeit in lip service, agreed to coordinate its oil production with OPEC in accordance with the reduction agreements reached. In 2017, it will cut production by 300,000 barrels a day. Assuming that this volume falls below average production, Russia will export about 4.8 million barrels a day next year.

As noted above, the budget deficit in Russia in 2016 should be $48.1 billion. If Russian oil exports for 2016 are estimated at $71.52 billion, then Russia will need to export $48.1 billion more oil to achieve a zero budget deficit. Priced at around $68 a barrel, based on daily production of 4.8 million barrels. This is slightly less than the forecasts of the Russian finance minister, which he made this year. But there is nothing unexpected here.

The Russian State Duma recently approved the budget for next year. Some figures from it, say, for certain items of defense spending, are not openly published. Apparently, the minister knows some other expenses unknown to us, which must be taken into account. Or maybe he just wanted to lower expectations.

Too Much Oil

This means that Russia needs a price increase of about 30 percent from the current rate. This is only to ensure that the budget is deficit-free. But even such a serious increase in prices will not solve Russia's economic problems. It will simply allow her to maintain the current level of spending without getting into various reserve funds.

But there is already a reduction in spending in various social services. Russian Ministry The Finance Ministry predicted that in 2017 all funds from one such fund will go to cover the budget deficit. Russia expects that this deficit in 2017 will decrease to three percent of GDP.

At the moment, a significant increase in oil prices seems unlikely. The market is overstocked. The world's leading economies are forecast to stagnate at best. And the more the price rises, the more the United States will increase oil production.