Novak: oil price by the end of 2016 could reach $40-50 per barrel

MOSCOW, January 15. The price of oil by the end of 2016 could be $40-$50 per barrel. Such cost can be in the middle of the year. This was stated by Minister of energy Alexander Novak in the framework of the Gaidar forum.

“It’s about $40-$50. I think by the end of the year we will see these numbers – $40-$50 and maybe, even in average year these figures will be”, – he told in interview to RBC TV channel.

The decline in oil prices to $10

Also Novak said that the Ministry of energy does not consider the scenario of a decline in oil prices to $10 per barrel.

“The decline in oil prices to $10 a barrel – a low percentage of probability. We do not consider this option,” he said.

January 15, 2016 exchange price of Brent crude oil fell below $30 US per barrel.

In the budget of the Russian Federation in 2016 based on the price of $ 50. The Finance Ministry proposes to adjust the budget based on oil price at $40. Ministries and agencies until mid-January must submit to the Ministry of Finance their proposals for a 10 per cent reduction of their costs in 2016 of the Adjusted budget will be presented at the end of Q1 2016.

The agreement on reducing oil production

Novak said that an agreement between OPEC cut production of oil is unlikely, because much now depends on the increase of domestic production of shale oil importing countries.

“From our point of view, such a stance is unlikely that all countries within OPEC even agreed, let alone with countries outside the OPEC coalition. Because a great influence on current importing countries that high prices increase production and reduce oil imports from the world markets”, – he said.

The critical level of oil prices

The Minister also noted that the critical oil price for the Russian oil is reduced to the level of cost of production, which in Russia amounts to $5-15 per barrel.

“Critical level is the level of cost and they are $5-$15 more only when the price falls to affect the budget revenues”, – said the Minister.