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2 Sep, 2019 09:48

Russia not afraid of the big bad oil bear market – economy minister

Russia not afraid of the big bad oil bear market – economy minister

The Russian economy will not face serious pressure if oil prices crash to $40 per barrel, Russia’s Economic Development Minister Maksim Oreshkin has said.

In an interview with TASS news agency, the minister noted that Russia will still be affected by any global economic turmoil, but not as seriously as before. He explained that the country has managed to significantly cut its dependence on oil. Just five years ago, the Russian budget relied on $115 per barrel for crude, while other major oil exporters were satisfied with lower prices.

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“We have traded places with the Saudis in the oil market: they need $70 per barrel, and we will be satisfied with $40,” Oreshkin said.

He added that Moscow considers $60 per barrel a reasonable price, as at this level Russia can invest in new projects.

“[The price of] $40 per barrel will complicate things, but even with this price we will not experience serious pressure on financial markets and in the domestic economy, from the point of view of budget and balance of payments,” the minister told the agency.

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According to the economy ministry’s earlier calculations, cited by business daily RBC, the Russian economy may, in a worst case scenario, shrink by more than 30 trillion rubles  ($450 billion) in the four years to 2024. The scenario implies that the country loses extra revenues from crude exports with oil prices expected to stand at $42.5 per barrel in 2020 and $45.9 per barrel in 2024.

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