IMF: the current situation in the oil market — not a crisis, and the new normal

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МВФ: нынешняя ситуация на рынке нефти — не кризис, а новая норма

Low oil prices are not evidence of a crisis in the world oil market, it is now the new normal and you get used to it. This statement is contained in a new report the analysts of the International monetary Fund.

He explained that the stabilization of prices in recent time, does not mean that in the foreseeable future they will return to the level of 100 dollars per barrel. This will not happen for three reasons.

First, economic growth in both developing and developed countries in recent years has slowed, which automatically resulted in a slowdown in oil consumption. This is especially noticeable in the case of China, and the state of its economy is the determining factor for the whole of South-East Asia.

Secondly, shale oil producers have shown an unexpected resilience in the current unfavorable conditions. Thus, shale production is firmly established in the structure of world production of hydrocarbons, and now it can no longer be considered a temporary factor.

Third, the Paris climate agreement will require all signatory countries efforts to reduce greenhouse emissions, and one of the main causes of CO2 and methane is the extraction and use of oil. As a result, the demand for it, though, and will continue to grow, but significantly slower than it could, because of the mass transition to other energy sources.

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Thus, together with the continuing increase in production by OPEC countries and Russia, it leads to the formation of a new price norm, analysts say the IMF. Its main characteristics are “low” and “long.” For example, in long-term forecasts indicate that by 2021 the average price of oil exceeds $ 60 per barrel.

However, the predictions of the IMF for the immediate future look a little more optimistic. In its October World Economic Outlook the Fund increased oil price forecast for 2016 from $ 36 to of 42.96 per barrel. And in 2017 the IMF expects oil to average 50 to 64 dollars per barrel, while in June, said only about 42 dollars.

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At the same time, the IMF has improved compared with the June forecast of changes in Russia’s GDP in 2016. Instead of a decline of 1.2% is now expected to decline in the gross domestic product is only 0.8% compared to 2015. Improved assessment of the increase of Russia’s GDP in 2017 from 1% to 1.1% for the current year.

“Higher revenues from oil exports provide some relief to exporters and the Russian economy in particular — to explain their findings, the analysts of the IMF. — Currency exporters, including Brazilian real, Russian ruble and South African Rand strengthened, reflecting the recovery in oil prices and the overall strengthening of financial market confidence to the economic systems of emerging markets. This is partly due to expectations of lower interest rates in the advanced economies”.

The Fund’s experts, however, noted that, although the prospects for Brazil and Russia has improved somewhat, in these countries “remain challenging macroeconomic environment”.

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