“The US president is able to make efforts so that the world price of oil will decrease and Russia will be economically affected by this. However, this is much easier said than done. Thus, the economist, executive director of the Economic Discussion Club, Oleg Pendzyn, commented to our publication on Donald Trump’s plans to collapse the price of oil in order to put pressure on the Russian Federation. According to the expert, the American leader is within the framework”, — write on: ua.news
The US president is able to make efforts so that the world price of oil will decrease and Russia will be economically affected by this. However, this is much easier said than done.
Thus, the economist, executive director of the Economic Discussion Club, Oleg Pendzyn, commented to our publication on Donald Trump’s plans to collapse the price of oil in order to put pressure on the Russian Federation.
According to the expert, the American leader intends to negotiate with OPEC and Saudi Arabia as part of the implementation of his strategy. But whether it will be possible to do it is a big question.
“For understanding: OPEC countries produce about half of all oil in the world. It’s just… That is, OPEC actually sets the price and regulates production only in the Persian Gulf, the Indian Ocean, the Middle East, and that’s it. This is a small piece of the globe that is under their control. So when Trump talks about “dealing with the Saudis,” it’s more about populism. Only a certain amount of production in a small section of the territory depends on them.
How much will it affect the Russian Federation? Well, the approximate cost of producing Russian oil is about $35 per barrel. Plus logistics. That is, even a price of $45 per barrel will be almost unprofitable for Russia. The price of $40 and below will be critical,” the expert notes.
Pendzin provides figures: in the structure of the Russian economy, resource rent occupies about 35-37%. That’s a lot.
“So when we talk about the total volume of revenues, they really have a critical importance for the Russian budget. And if we talk about the prospects of lowering prices, then all this would certainly have a strong impact on Russia’s financial capabilities. And here we are talking not only about the war, but also about social payments… So the drop in oil prices can hit Russia, and how!
The question is how quickly and effectively. It is one thing to promise and talk, and another thing to implement… Therefore, I am skeptical that it will be possible to do it. At least quickly. There are simply a huge number of interests in the oil market. This is not a simple process. It’s not even months, it’s years. A year, one and a half, no less. Therefore, as a “scarecrow” for the Russians, it works perfectly. But as a quick implementation — well, probably not so much. I perceive all of Trump’s rhetoric as preparation for negotiations with Putin,” Oleg Pendzin summarized.
Earlier we wrote that after Trump’s appeals to OPEC, oil fell in price.
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