Home > Chemical News

Chemical News

Russia sees oil prices drop to $60

https://www.chemnet.com   Oct 23,2007 Shanghai Daily
BEIJING, Oct. 22 -- Russia, the world's second-biggest oil exporter after Saudi Arabia, forecast crude oil prices may drop to 60 U.S. dollars a barrel in a decade.

"Oil is significantly overpriced," Finance Minister Alexei Kudrin said in Russian at a press briefing on Saturday in Washington. "The price is at a speculative level and has heated up because of conflicts in oil-producing regions. The jump in price is temporary."

Crude oil breached 90 dollars a barrel in New York for the first time on Friday and last traded at 88.60 dollars. Oil rose 5.9 percent last week because of the US dollar's depreciation and concern Turkey may attack Kurdish rebels in Iraq, owner of the world's third-largest oil reserves, Bloomberg News reported.

"Based on our studies, a realistic price is closer to 50 dollars a barrel," Kudrin said. "Taking into account inflation, oil will increase a little bit and will be at about 60 dollars a barrel in 10 years."

Crude oil prices have "overshot their fundamentals and are likely to come down sharply," Eric Chaney and Richard Berner, analysts at Morgan Stanley, wrote last Thursday. Even so, "further increases toward 100 dollars are still possible, as the combination of lower-than-expected inventories, OPEC discipline, and renewed geopolitical tensions, robust Asian demand and a weak US dollar have worked nicely for oil bulls."

Russia has 79.5 billion barrels of untapped oil, the sixth-largest reserves in the world, behind Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, according to 2006 figures published by London-based BP Plc. The country pumped 9.77 million barrels of oil a day last year, enough to supply 64 percent of US demand. Only Saudi Arabia had higher output with 10.9 million barrels a day, according to BP.

The price of Urals, Russia's major export blend of oil, has surged almost eight-fold since 1998. That rise has helped boost the nation's oil fund, which accumulates some of the revenue from crude oil sales, to about 141 billion dollars.

 Print  |    add to Favorites  |    Close