President Vladimir Putin said Russia will cope with the rout in crude oil after benchmark prices plunged to a four-year low near $70 a barrel.
“We are satisfied overall with the situation and do not see anything so extraordinary in what is happening,” he said today in Sochi, Russia. “Winter is coming and I am sure that the market will come into balance again in the first quarter or toward the middle of next year.”
Putin’s comments run counter to the consensus of analysts, who see Russia threatened with recession after crude collapsed into a bear market. The world’s second-largest oil exporter, which relies on crude for almost half its income, is revising down estimates after basing next year’s budget on oil at $100 a barrel, Economy Minister Alexei Ulyukayev told reporters in Moscow today.
The price may drop below $60 a barrel in the first half of next year, which would be “difficult,” OAO Rosneft Chief Executive Officer Igor Sechin said today. For the whole year, the price may average $70 to $75, the head of Russia’s largest producer said.
The price will recover in the medium term, Energy Minister Alexander Novak told reporters in Sochi after meeting Putin. That should be “a level that is comfortable for oil and gas companies and exporters; it could be the price level of $85- $90.” Russian output will remain flat at 525 million to 526 million tons (about 10.5 million barrels per day), he said.
Brent crude is trading below $73 a barrel after the Organization of Petroleum Exporting Countries triggered the biggest one-day plunge in three years yesterday when it refrained from cutting output to counter a global supply glut amid the U.S. shale-energy boom.
Russia met with OPEC ministers earlier in the week, and also decided against possible cuts.
“None of the big energy producers, including Russia, insisted on any specific measures to get prices into balance again,” Putin said today.