For the Russian economy, the cost of oil is of great importance. It is thanks to the sharp increase in prices for hydrocarbons at the beginning of the two-thousandth, for the last 15 years the country has become a period of economic prosperity. Therefore, a strong fall in oil prices is of interest to today not only economists, but also ordinary Russians. Why does the price of oil fall, how long will this last, and what awaits us? These questions sound almost in every house. Let's try to understand the causes and possible consequences of the phenomenon.
Why oil is cheaper and why it depends
The cost of oil is determined on the stock exchanges of raw materials of different countries. Therefore, the price of the product is formed not only from the ratio of supply and effective demand, but also from the speculative component. It is for this reason that the price of oil is very difficult to forecast. The value of this product is characterized by dizzying ups and swift, almost sheer, falls.
Why are oil prices falling today?
The sharp decline in the cost of oil in 2014 is due to:
- The fall in demand for this product due to a decline in the level of commodity production in the world. Those. production of goods is falling, and the demand for energy carriers, including oil, is also dropping. As a consequence, the price of oil is falling.
- The growth of supply against a background of falling demand. In recent years, another big player has appeared on the market - the US. According to forecasts, next year the level of production of this country will equal the volume of production of the largest exporter - Saudi Arabia. As a result, instead of a buyer, the US has become a major producer. In addition to oil shale, Iranian oil may appear on the market, as sanctions are planned to be removed from Iran, which was publicly announced. However, while the country still has no opportunity to sell its raw materials on the exchange, but the market has already won this news.
Against this backdrop, traders trading in oil futures are waiting for OPEC actions (the cartel uniting the largest producers) aimed at reducing production. But every new meeting brings disappointment. The cartel does not cut production, since for many of its participants hydrocarbons are the main source of budget filling. Saudi Arabia could have actually cut production, but the country aspires to maintain its former sales market in new conditions with all its might. Current losses are less important than market share. Russia is not reducing production.
So, why oil is getting cheaper now, but is it possible to expect a price increase and when? The realities are such that the low price of oil can last for many years. Let's remember the late 80's and the decade of the 90's. But is it necessary to panic in these conditions ?! We say: no. For 15 years in Russia on money from the sale of oil, a lot has been done to make the country less dependent on the cost of energy. We are less dependent on exports, which can be seen in any supermarket. After the crisis of 98, when the ruble depreciated by 300%, the prices in stores grew threefold. Now this does not happen, which speaks of the stability of the economy. Of course, during the transition period it will not be easy, but we have everything to cope with the unfavorable economic conjuncture.
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