News / Europe

    Falling Oil Prices Prompt Russian Economic Fears

    Henry Ridgwell
    LONDON - Oil prices have shown a steady fall in the last few months, prompting fears that the Russian economy, which relies heavily on energy exports, could suffer.  Meanwhile, new sources of oil are coming on line and helping to drive down the price at the pump.

    Khanty-Mansiysk in Siberia - home to around 70 percent of Russia’s developed oil fields and the source of much of the country’s wealth.

    Russia produces more than 10 million barrels of oil per day - making it a major energy player.

    Stephen Tindale, an energy economist at the Center for European Reform, said, “Almost half of the Russian government’s revenue comes from various taxes on oil and gas exports.”

    Tindale says that leaves the Russian economy highly vulnerable to a fall in oil prices. “It would mean their budget was well out of balance and so would be very serious, short-term, for Putin and the Russian government," he said.

    In recent weeks, oil prices have begun falling - from around $125 per barrel in March to around $100 by June.

    For an explanation we have to look back to why prices were high at the beginning of the year, says Paul Stevens at Chatham House, an independent policy institute in London. “Oil demand was beginning to pick up again, supply was being constrained, we had lost Syria, we had lost Yemen, we had lost South Sudan, Libya was still off the market to a certain extent," he said.

    Stevens says demand is now falling, thanks to fears about the world economy - and that could be bad news for Russian exporters.

    In addition, Iraq has seen the opening of new oil fields like this one in West Qurna in April. which was developed in partnership with Russian giant Lukoil.  Its vice president, Sergei Nikiforov, said, “Today, Iraq and Russia inaugurated the giant oilfield of West Qurna, one of the largest fields discovered in the world.”

    Stevens at Chatham House says developments like this are offsetting the impact of recent geopolitical upheavals. “The supply side has also improved, partially because Iraq has been coming on but more importantly because other OPEC members, particularly Saudi Arabia, have been increasing their production, in part in an effort to offset the loss of Iranian production because of the embargo," he said.

    While the short-term outlook may be for a slow decline in oil prices, Stevens says a single event, such as an Israeli attack on Iran over its nuclear program, could see prices rocket towards $200 a barrel.

    You May Like

    Video For Many US Veterans, the Vietnam War Continues

    More than 40 years after it ended, war in Vietnam and America’s role in it continue to provoke bitter debate, especially among those who fought in it

    Video Newest US Citizens, Writing the Next Great Chapter

    100 immigrants graduated Friday as US citizens in New York, joining the ranks of 680,000 others every year in cities across country

    Family's Fight Pays Off With Arlington Cemetery Burial Rights for WASPs

    Policy that allowed the Women Airforce Service Pilots veterans to receive burial rites at Arlington had been revoked in 2015

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: HJRR from: USA
    June 13, 2012 1:07 PM
    Russia needs another kick in the pants. The fall of the USSR was in large part due to the collapse of oil prices and the cost of their war in Afghanistan. They were bankrupt politically, militarily and economically. Today, again they are dependent on oil exports and the only way for true reform in RUSSIA is for their to be another collapse in oil revenues to the state. Then and only then will the people get off their oil-drug-fix and be forced to make major reforms to their economy, their government and the whores they export to the world.

    by: Mike
    June 11, 2012 5:01 PM
    In Russia, nothing is being done to get off the oil needle. The whole economy is tied to the sale to West energy. This policy led to the fact that Russia has become economically dependent country - Russia buys food abroad, the citizens of Russia prefer to buy Japanese, American and European cars, Russia complete zero in electronics, which is purchased only at the West and in China, Russia does not have a competitive industry for the production of clothing and shoes, and they are also buying in the West. In short, if tomorrow, for whatever reason, Russia will stop all of this to buy abroad, shelves of Russian stores will return to its original state - shelves will be empty again like in USSR ...
    That is why Putin and his company, like air need high oil prices. They are a small decline has already caused nervousness in the Kremlin. If prices drop to $ 60 a barrel Russia's current budget would be impossible. That is why the civil war in Syria and a possible military strike on Iran in the interests of the ruling elite of Russia. Any tension, and especially the war in the Middle East will lead to a sharp rise in oil prices.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora