REPORT
By Emre G├╝rkan Abay
Russia letter, week beginning Nov. 7

Oil price decrease does not prove hindrance to Russia’s production levels

 The “freezing of oil production levels” rhetoric, which has been voiced by OPEC members and non-OPEC countries such as Russia, is becoming merely more speculative than a possible reality, causing oil prices to decrease to levels of around $45 per barrel.

As one of the largest oil producers in the world, with heavy reliance on oil exports for more than 50 percent of the economy, this is bad news for Russia.

The Russian ruble, which enjoyed 62 levels against the dollar since September, has dropped to above 64 marks as of last week, after markets started reacting to the decrease in oil prices.

Meanwhile, according to some Russian newspapers, in order to cover the budget deficit, the government is now planning to increase taxes on alcohol, tobacco products and gas by 20 to 30 percent, to be effective from the beginning of the New Year.

While Russian authorities are repeatedly saying they are ready to support an agreement on oil production levels, the country keeps increasing its oil production.

According to data released by Russian Ministry of Energy, the country’s oil production marked a new record in October with an increase of 0.1 percent to 11.2 million barrels per day, compared to September.

As the Russian ruble has lost almost half its value in the last three years, Russian oil companies have been exporting their products in US dollars. This has allowed them to enjoy higher income from exports which has led to more drillings and oil production during this period.

The country’s natural gas production in October also increased by nearly 10 percent to 61 billion cubic meters, compared to September.

 

 

07 Nov,2016

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