Russian oil output hits record high despite price slump

Slide in crude prices casts shadow on economic recovery prospects

MOSCOW: Russia pumped a record 534 million tons of crude oil in 2015 even as it reeled from a fall in oil prices caused by a supply glut, energy ministry data showed on Saturday.

The country’s oil and gas condensate production last year increased 1.4% year-on-year, with output reaching 10.73 million barrels per day, a post-Soviet record, according to data cited by Interfax news agency.

The slide in oil prices and Western sanctions over Moscow’s role in the Ukrainian crisis have hurt the oil-dependent Russian economy in recent months.

Its currency ruble lost around half of its value in 2014 but recovered slightly as energy prices stabilised last year.

But the renewed slump in oil prices - with Brent crude falling to an 11-year low last month - casts a shadow on the prospect of economic recovery.

“All states, including Opec member countries, have concentrated on increasing their output and turning out as much oil as possible not to lose their market niches, not taking note that they are driving prices down,” energy consultant Mikhail Krutikhin said on Russian radio. “It appears that Russia is also following this path.”

Russia’s central bank predicted that if oil prices remain at their current level, the GDP could shrink 2% in 2016.

President Vladimir Putin assured at his annual press conference earlier last month that the country was prepared for any economic situation, despite the volatility in oil prices.

Russia’s 2016 budget had been calculated on the basis of an oil price of $50 per barrel, a figure Putin said was an “optimistic” assessment of the situation, with the price now hovering around $37.

Published in The Express Tribune, January 3^rd, 2016.

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