Russia Might Be Forced To Cut Oil Production.
Russian Energy Minister Alexander Novak says Moscow is considering a possible cutback in oil production to help end the drop in prices, but there appears to be little it can do without harming its own energy sector.
“The issue [of production cuts] requires careful consideration,” Novak told reporters in Moscow. “But on the whole, this question is being discussed, but there are no final decisions on it.”
He said the issue was thorny because Russia doesn’t have the technology to manipulate its supplies quickly. Besides, he said, the country’s budget relies heavily on income from oil exports. Russia can’t balance its budget unless the average price of oil is about $100 a barrel.
Even that price may be too low. Some analysts say oil should sell at up to $115 a barrel to allow Russia to balance its budget because spending has risen dramatically for social programs and the military. Further, US and European Union sanctions on Russia’s financial as well as oil sectors have left the government short of cash.
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