Average Oil Price in the First Half of the Year to Amount to $25.5 per Barrel?

While Iraq is in a crisis, the average oil price in the first half of the year will amount to 25.5 dollars per barrel, Russia's Deputy Minister of Economic Development and Trade Arkady Dvorkovich cited the Russian government as forecasting after the Thursday government session, which had discussed the country's social and economic development scenarios.

"War in Iraq will not seriously affect the Russian economy, although much will depend on the length of military action, which will influence the behaviour of prices for energy products and the economic expansion rate," he said. If the military action is soon over, the oil price will drop to 20 dollars per barrel in the second half of the year; otherwise, the price may amount to 22-23 dollars per barrel.

According to Dvorkovich, the Russian economy will both benefit and lose in case the oil price stays high. The benefits will amount to growing investments into the country's export branches, formation of a financial reserve, and growth of budget receipts. On the other hand, inflation rates may grow.

Answering journalists' questions about the influence the war will have on world economics, he said it would be negative.