Russia's finance ministry suggests pending oil price slump
Russia's Finance Ministry has warned of the threat of a new collapse of oil prices if they remain above the long-term equilibrium levels of $50-60 per barrel, the ministry said in a document.
"In 2018, oil prices have reached new maximums since 2014. The main factors of price growth were the economic crisis and the collapse of oil production in Venezuela, as well as the intention of the United States to 'nullify the oil production in Iran' after withdrawal from the nuclear deal. Despite this, the stable prices of the oil market are below the current figures, and amount to about $50 per barrel, and the current growth should be regarded as temporary. If oil prices continue to remain above long-term equilibrium levels, the price collapse will repeat again," Sputnik cited the document as saying.
The authors of the document believe that the emerging situation is similar to the period of high oil prices in 2011-2013, when the long-term equilibrium price was about $80-90 per barrel, while the actual price amounted to about $110.
"Then, after a period of high prices in 2011-2013, the OPEC started price war against US shale oil production, and the marginal costs of oil production around the world fell to the current level of $50-60 per barrel," the document adds.
According to the ministry, such countries as the United States, Canada, Brazil, Angola and others have enough resources and opportunities to increase oil production.