UNITED STATES, WASHINGTON (OBSERVATORY) — Russia continues to believe in expensive oil and even expects prices to rise to $ 100 over the next 15 years. What is the reason for such optimism?
According to Russia’s Energy Strategy until 2035, excerpts from which Interfax published, authorities expect prices to rise to $ 100 per barrel.
“The level of world prices for Urals oil until 2020 will be in the range from $ 40 to $ 50-65 per barrel (in 2014 dollars), followed by growth by 2025 to $ 80-100 per barrel,” the document says.
A rather curious forecast, especially considering that just the other day, Energy Minister Alexander Novak said that prices of $ 100 can be forgotten.
“Everything about $ 100 has long been forgotten. We live on the assumption that in the medium term fair prices are $ 50. Our budget for 2019 is set up based on the price of $ 43-45 per barrel.”
In addition, the overwhelming majority of market participants and experts do not expect a price increase; on the contrary, many predict that the price of “black gold” will decrease.
The strategy presents two scenarios. In an optimistic scenario, oil prices will rise from $ 65 per barrel in 2020 to $ 80 per barrel in 2025, then to $ 90 in 2030 and to $ 100 in 2035.
In a pessimistic scenario, oil prices in 2020 will amount to $ 50 per barrel, then grow to $ 65 per barrel in 2025, to $ 70 in 2030 and to $ 80 per barrel in 2035.
As we can see, the document does not even envisage lowering the price of a barrel below $ 50. Moreover, even in a pessimistic scenario, oil prices, according to the authors, will only increase over time.
Of course, the world’s oil reserves will gradually decrease, which theoretically will lead to an increase in prices, but this scenario is possible if demand continues or grows. In the meantime, one should not forget that alternative energy is developing quite actively in many countries, and, according to experts, it has already managed to significantly reduce its cost.
In Europe, we recall, in general, they plan to abandon cars with internal combustion engines in the coming years. Of course, it is difficult to look into the future, and estimates built in the current conditions may change significantly in the future.
We also add that the energy strategy of Russia for the period until 2035 assumes in an optimistic scenario that the annual oil production is maintained at 550-555 million tons, in the conservative scenario – a gradual decline to 490 million tons, according to a draft document that Interfax reviewed.
At the same time, it is planned to increase oil export to 308 million tons under an optimistic scenario and reduce it to 253 million tons, while it is pessimistic compared to 2020, when 288 million tons and 286 million tons are forecasted.
Preservation of the current volumes of Russian oil exports to the European direction is expected with a possible slight decrease by the end of the period and a multiple increase in supplies to the Asia-Pacific countries.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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