News / Europe

Falling Oil Prices Prompt Russian Economic Fears

x
Falling Oil Prices Prompt Russian Economic Fearsi
|| 0:00:00
X
Henry Ridgwell
June 11, 2012 8:09 PM
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. VOA’s Henry Ridgwell takes a look at the state of the global oil market at a precarious time for the world economy.
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.”

Watch a related video report by Mil Arcega

x
Oil Prices Still Falling on Europe Crisis, Weak Global Prospectsi
|| 0:00:00
X
Mil Arcega
June 12, 2012 1:22 AM
Oil prices edged lower again on Monday, erasing a 2 per cent gain last week on continuing worries over the ongoing economic crisis in Europe and slumping growth around the world. With oil consumption falling and inventories rising, some energy experts believe prices have not yet reached bottom. Mil Arcega takes a look at what that might mean for oil producers and consumers.

Watch a related video report by Mil Arcega

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

Turkey: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ends Ebola Lockdown

Health ministry says it has reached 75 percent of its target of visiting 1.5 million homes to locate infected, educate population about virus More

US Pivot to Asia Demands Delicate Balancing Act

As tumult in Middle East distracts Obama administration, efforts to shift American focus eastward appear threatened More

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.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid