Russian Finance Ministry sees oil price at $40–45 in long-term
Moscow. Oil prices will stabilize around the U.S. $40–45 per barrel in the mid- and long-term. The Finance Ministry said in the draft main directions of the 2018–2020 budget, tax, customs, and tariff policies seen by PRIME on Tuesday.
“There is little doubt left in 2017 that the hydrocarbon market has entered a long-term regime of consistently low oil prices” due to improvements in production technologies and output of shale oil in the U.S. the first place, the ministry said.
“The dynamics are also defined by a flexible structure of the U.S. oil production market marked by high competition, low entry barriers, and a good access to capital markets. The threshold of economic efficiency of shale oil production fell below a $50 per barrel mark, and it is even below a $40 per barrel mark if we don’t take into account non-recoverable losses from purchases of sites.”
Oil prices cannot be indefinitely and artificially high, and regulation of oil production by OPEC states is losing efficiency, repoted Prime. Regulation of supply will only lead to rapid restoration of balanced prices. Volatility of oil prices should abate in the future taking into account the speed with which shale oil production expands in response to higher oil prices, the ministry said.