Ekaterina Galeeva, a Researcher at the Industrial Organization and Infrastructure Economics Department at the Gaidar Institute, explained in a commentary for the "Vzglyad" newspaper the sharp drop in global oil prices and considered possible scenarios for the Russian economy.
The collapse in prices was triggered by the OPEC+ decision to radically revise its forecast from a deficit to a surplus of oil in the market. Commenting on why the organization had stuck to the optimistic scenario for so long, Ekaterina Galeeva pointed to two main reasons. "OPEC experts expected that low prices and infrastructure constraints would prevent the US shale companies from significantly increasing production. On the other hand, OPEC+, being a dominant cartel, can use its forecasts as a tool to manage market expectations. Publication of data on an impending deficit can help to develop relevant sentiment and maintain a price level that is optimal for member countries," the expert explained.
In the context of Russia's budget planning, the expert considers a relatively favorable scenario, which is feasible if current policies are maintained. "The baseline scenario assumes that OPEC+ continues its policy of 'manual market control,' extending voluntary cuts to protect the price corridor. Production growth in the US is going on, but gradually stabilizes. As a result, global inflation will relatively stabilize. Russia, meanwhile, implements its budget within planned parameters and maintains exchange rate and inflation stability," she noted.