The Russian Finance Ministry has warned that a new global collapse of oil prices is possible if the price stays above the long-term equilibrium levels of $50-60 per barrel, Dp.ru reports.
According to an official document by the Finance Ministry, “In 2018, oil prices have reached new maximums since 2014. The main factors of price growth were the economic crisis and the collapse of oil production in Venezuela, as well as the intention of the United States to ‘nullify the oil production in Iran’ after withdrawal from the nuclear deal,” the document says, adding that “despite this, the stable prices of the oil market are below the current figures, and amount to about $50 per barrel, and the current growth should be regarded as temporary […] If oil prices continue to remain above long-term equilibrium levels, the price collapse will repeat again.”
The paper’s authors believe that the emerging situation is similar to the period of high oil prices in 2011-2013, when the long-term equilibrium price was about $80-90 per barrel, while the actual price amounted to about $110.
“Then, after a period of high prices in 2011-2013, the Organization of Petroleum Exporting Countries (OPEC) started price war against U.S. shale oil production, and the marginal production costs around the world fell to the current level of $50-60 per barrel,” the document said.
According to the ministry, such countries as the United States, Canada, Brazil, Angola, and others “have enough resources and opportunities to increase oil production.”