Russian MP Urges Moderate $20 Per Barrel

Alexander Shokhin, chief of the Duma committee on lending institutions and financial markets, said at a press-conference Friday that Russia should work to see world oil prices settled at the level of $20 per barrel. In his opinion, now that a forecast for world economic development is rather unfavourable, Russia should hardly side with the OPEC in upholding high oil prices leading to a protracted world recession. With its budget largely dependable on export items, Russia should act toward an early world economic growth, but see to it that oil prices will not drop below $15-16 per barrel, the critical figure for the oil industry and the budget. The deputy thinks that these conditions are well in compliance with $20 per Brent blend barrel and, consequently, $18.5 per Russia's Urals blend barrel. This considered, a new price corridor of $18-22 per barrel should be imposed upon the OPEC. These new parameters of the price corridor suggest other amounts of oil extraction cuts by independent producers, that is 100-150 barrels a day rather than 500,000 suggested by the OPEC. By propping the US and European economies with moderate oil prices, Russia may reckon on a certain compensation on their part-additional oil purchases for making reserves and the backing of Russian oil-and-gas projects.

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