MOSCOW, Dec. 28 (UPI) — There will be few pressures on the Russian economy so long as the price for crude oil stays above $45 per barrel, the head of one of Russia’s largest bank said.
Russia’s export-based oil economy faced pressure at the start of the year from the steep downturn in the energy sector. The value of the national currency, the ruble, collapsed, the economy stagnated and inflation soared as the price for crude oil dropped below $30 per barrel.
Herman Gref, the CEO at Sberbank, said the Russian economy has stabilized and should be able to withstand some level of declines in commodity prices.
“Coal may become cheaper, but its price grew this year, so there is some room for maneuver,” he was quoted by Russia’s state-run news agency Tass as saying. “Oil now trades at $52-53 [per barrel], and even if the price falls to $45, there will be no shock.”
Gref said in early 2016 from the sidelines of the World Economic Forum in Davos, Switzerland, the Russian economy should expect a volatile year ahead. At the time, he expected crude oil prices would end 2016 at around $40 per barrel.
The price the Brent crude oil, the international benchmark, was around $56 per barrel in early Wednesday trading.
A survey last week from the Bank of Russia found most citizens had a generally positive outlook for the year ahead.
“The respondents were more upbeat about future development of the country and changes in their material wealth, expecting increased output and better quality of life next year together with lower unemployment and less corruption,” the bank stated.
Russia is party to an agreement coordinated by the Organization of Petroleum Exporting Countries that calls for production cuts starting next week. Russia would contribute the bulk of the managed declines from non-OPEC members, though its track record on coordinated production cuts is poor.
Russia is on pace to average about 11 million barrels of oil production per day this year, about 1.8 percent higher than last year.