Hysteria in Russia is already growing: what could finish off the Russian economy

Hysteria in Russia is already growing: what can finish off the Russian economy Anzhelika Galesevich

The Russian economy is significantly dependent on oil exports. It is predicted that prices for it will begin to decline. The risks are associated not only with the United States and Saudi Arabia, but also with Venezuela, Canada and Guyana. The countries may increase oil supplies to the international market.

This will seriously affect Russia, since there will be many offers, and requests will become fewer. China is also a serious player in this game, reducing oil purchases. Doctor of Economics Igor Lipsits shared this information with 24 Kanal, noting that hysteria has already begun in Russia on this matter.

On the hysteria of the head of Rosneft

The head of Rosneft Igor Sechin predicted that the cost of benchmark Brent oil could fall by 15% from the current level, and Russian oil – by 30%. The main risks are associated with the United States and Saudi Arabia.

According to Lipsits, Sechin is responsible for some payments to the budget, so he got really nervous. He has been shouting all year long, saying, “they are charging me the wrong prices for oil, so there is less money.” The thing is that there used to be open foreign trade. Companies fairly assessed the prices for the export of Russian oil. Now, however, there are conditional calculations, which are obviously far from the real cost.

That is why Sechin constantly complained that he was being robbed, because they set higher prices for $3.5. He prepares the Ministry of Finance and society in advance that the price of oil is low, incomes are small, and he himself is a beggar. Like, “don't touch the old, the poor, and don't take too much money,” Lipsits emphasized.

In order to “minimize risks,” the company's budget includes an even lower price – about $45-50 per barrel of Russian Urals. This is almost 30% less than the current price of barrels from Russia – $63.48. However, according to the doctor of sciences, this may not help to resist. Sechin is running out of old oil fields. It is necessary to look for new ones, and they require much more expenses. If we take such a step, there will be huge losses.

There are no other stable and good sources of income in Russia, so it is beginning to “eat up” the last remnants of financial strength and reserves. We, economists, are watching this with great interest, how long Russia will be able to hold out, – he emphasized.

What other threats may Russia face

Newly elected US President Donald Trump promised during the election campaign to collapse oil prices by increasing production in America and asking Saudi Arabia to increase supplies. But there are other threats to the oil market, from which Russia will suffer first of all.

As is known, Trump is being forced to find a compromise with Venezuela and allow it to export oil, since the country has large reserves. The States are interested in this, some contracts have already been approved. There is also an increase in oil supplies from Canada and Guyana.

There is a threat of overflowing the world market with oil. Will there be demand? Doubtful. It is already starting to decrease, which is primarily due to China, which is actively promoting its electric cars. To charge them, you need electricity, which can be produced not only from fossil fuels, but also from hydropower, – emphasized Igor Lipsits.

Therefore, China is reducing its oil purchases. Accordingly, its quantity on the market will increase, and demand, on the contrary, will decrease. This, in turn, will provoke an even greater collapse in oil prices than the head of Rosneft Sechin expects. Therefore, the threats to the Russian budget are extremely high.