The central bank of Russia has no plans to revise its current oil price estimates for the next 12 months despite the OPEC deal that saw international oil benchmarks pass the US$50 barrier and stay above it for a week now.
Speaking at an investor conference in London, the bank’s deputy governor Ksenia Yudayeva acknowledged that prices could go further up as a result of the international agreement, but also noted that there was significant downward risk, although she did not elaborate.
The central bank’s oil-price scenario for the medium term, not just for 2017, is for US$40 a barrel. At the same time, there is a second scenario envisaging average international prices of US$55 a barrel.
Last month, Yudayeva’s boss, governor Elvira Nabiullina, said that Russia was planning to start shifting its economic model away from the overreliance on mineral resource exports.
The transition, Nabiullina admitted, will take a while and will not be a smooth process, but as soon as next year, Russia may register GDP growth, albeit at a modest rate of less than 2%.
The shift could take even longer if prices stay where they now, as, according to one economist from Russian banking group Alfa, every US$1 above US$40 translates into around US$2 billion in budget revenues.
The 2017 budget, currently discussed by the government, has set the average international oil price at US$40 a barrel.
OPEC agreed last week to cut overall production by 1.2 million barrels per day, with Saudi Arabia shouldering almost half of the cut, and Russia agreeing to reduce its own output by 300,000 bpd, «gradually».
The gradual reduction will at some point coincide with a habitual seasonal production cut of around 150,000 bpd in the spring.