OPEC, allies’ oil cut deal may hurt Russian economy, says Bank of Russia
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Bank of Russia has said the Russian economy in 2018 may feel a negative impact of the global deal on oil production output cuts between OPEC and non-OPEC allies to shore up oil prices.
In a statement Friday, the bank said the curbs were likely to have a negative impact on the overall Russian economy, adding that fossil fuel consumption by cars was expected to peak in the mid-2020s, which would significantly hit oil prices.
“We assume that the OPEC+ deal… along with weaker demand for natural gas from abroad will temporarily curb a growth in (Russian) production which may have a negative impact on economic growth in general,” the bank said.
The central bank noted that Russia’s GDP was expected to rise by 0.4 percent quarter-on-quarter in the first quarter, accelerating to 0.5 percent in the second, saying growth in 2017 would be revised upwards from an initial estimate of 1.5 percent.
Earlier this year, Maxim Oreshkin, the economy minister said that prices of US$70 per barrel of Brent were unsustainable and that over the medium term, prices will most likely stay around US$60 a barrel.
Russia agreed to cut 300,000 bpd from its postSoviet record-high oil production of over 11.2 million bpd in November 2016, to aid efforts by OPEC and several smaller producers to relieve a global glut that sank prices to less than US$40 a barrel.