Centrum Stosunków Międzynarodowych - 18 July 2016: New forecasts of oil prices, in favour of Russian reforms

According to a recent survey conducted by Bloomberg, most common opinion among experts is that Russia has a chance to implement necessary structural reforms at a price of $ 40 per barrel of oil. Moreover, specialists point out that this price is yet low enough to make the structural corrects bound to happen, and at the same time high enough to secure Russian financial market from collapsing. Fortunately for Russia, the recent claim of the US Energy Information Administration raised its 2016 and 2017 forecasts for WTI and Brent crude prices. .In its monthly energy outlook report, the government agency forecast an average price of $ 43.57 a barrel for WTI this year, in contrary to the previous estimation of $ 42.83. Brent crude is seen averaging $ 43.73 this year, up from the $ 43.03 June forecast. For 2017, the EIA sees an average of $ 52.15 for both WTI and Brent. The EIA left its US oil production estimates for 2016 and 2017 at 8.6 million barrels a day and 8.19 million barrels a day, respectively. August WTI crude traded at $ 46.59 a barrel, up $ 1.83, or 4.1%.

Meanwhile, Azerbaijani President Ilham Aliyev said at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in the first half of 2016 about the need to build the economy of Azerbaijan as if „the oil era is over for the republic”.
“After a few years, Azerbaijan will supply natural gas in large volumes to the world market and the inflow of currency into the country will continue. But we have to live in the post-oil era. With the deepening of reforms, we will completely eliminate dependence on oil. And oil prices will not have importance for us,” APA cited the President as saying.

In the meantime Russia’s state-owned energy giant Zarubezhneft continues expansion, it will examine two new fields on the border of Iran and Iraq. Eventually, Zarubezhneft is to build mining facilities.

Azerbaijan is highly interested in being a link between Iran and Russia in terms of economic cooperation, as it will contribute to securing its position of leading country in south Caucasus. ”Azerbaijan is a bridge between Russia and Iran. The experience of historical interaction and contacts between cultures will help to establish, expand and ease the contacts between Russia and Iran with the assistance of Azerbaijan Republic," stated Yelena Dunaeva, senior researcher at the Center for the Study of the Middle East Institute of Oriental Studies. There is a plan of a meeting between the head of the countries: Vladimir Putin, Ilham Aliyev and Hassan Rouhani, in Baku.

The situation on the market is not that bright for Russia, though. As a consequence of previous years political perturbations, Russia is being displaced as the main suppliers of energy to China and Europe