Saturday, December 12, 2015

Russia declared plans to sell crude oil $40 a barrel for coming seven years to tackle Saudi Arabia

 In latest warning to Saudi Arabia which is at war with Russia over oil market share race Russia is preparing for collapse in oil sell revenues, as chances are high that oil could plunge to as low as $40 a barrel for at least next seven years. Russian deputy finance minister Maxim Oreshkin told that Russia is preparing scheme based on oil's fluctuating price. If it continues for long time, then it might prove devastating for OPEC nations. Also it would be disastrous for North Sea producers,to off shore oil exploration of Brazil and cash strapped Western oil producers. but Russia lives in different business climate, he said while talking to Vedomosti, a Russian newspaper. The latest shocker came from Russia, at the time when US crude prices collapsed to $35.56, due to continuing mistakes from hegemonic Organisation of Petroleum Exporting nations. Bank of America warned about risk of all out price war between OPEC nations itself as Iran and Saudi Arabia are fighting
bloody strategic rivalry using oil market.
Brent crude prices dropped to $37.41, though marginally growing demands. This price is lowest after collapse of the Lehman Brothers in early 2009. Though it is positive for world economy facing crisis. The International Energy Agency categorically mentioned that OPEC has ceased to work as umbrella organization and every producer producing oil at its will, without regulations, to settle the scores with others. OPEC oil revenues may fall to about $400bn (£263bn) current year if present oil prices continues, it was $1.2 trillion during 2012. $40 warning by Russia is the latest outbreak in a price war between Saudi Arabia and Russia, which are already in confrontation mode over Syria. The Russian emergency plans convey strong and unambiguous message to Saudi and other OPEC members that the Russia can thrive well even with very low crude oil prices for long time, as a result of floating rouble, which safeguards internal budget. Saudi Arabia is dragged in by a fixed currency exchange rates, pushing it to loose precious

foreign currency reserves to cover up a fiscal deficit, which are 20pc of its GDP. Russia enjoys strategic depth to sustain very long siege. It is pushing an import-substitution policy to give fillip to its engineering and industrial sector. Russian deputy PM Arkady Dvorkovich, earlier said that OPEC will be forced to correct track. They can sustain just for few months.
Kremlin officials smells that ultimate goal of Saudi Arabian policy is to drag Russia to OPEC. Russia termed it as OPEC bluff, and warned that Russia have greater endurance. Russia won't cut output as its big producers are globally listed companies, which are answerable to stakeholders. Mr Dvorkovich flatly said that they are not going to slash oil supply artificially. Crude Oil companies will work out their own plans. They

will decide on invest more or less as per market conditions. If prices remains low, oil companies will act to stabilize production or to cut crude production. The latest crude oil war may witness exhausted foreign currency stocks in Russia and economy may take nose dive and on the other hand it may show the world totally bankrupted gulf nations.