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Today Friday, 9 june, 2023 year
The fall in oil prices puts pressure on the state of the Russian economy - RTS Indices and MICEX
Crude oil standards are benchmarks for the different types of raw materials that are available on the market. These oil markers, as landmarks, were first introduced in 1980years, with the aim of establishing a standard for the most actively traded products on the market.
Basic standards - oil grades
WTI (Western Texas Intermediate): - benchmark for oil Light Sweet Crude in the United States with a sulfur content 0,24% and has a density API 39,6. Due to its low viscosity and low sulfur content, WTI rated as a high quality brand. Main application - production of gasoline and diesel fuel.
1. Brent oil
Light Sweet Crude, mined in the North Sea contains a sulfur percentage of about 0,37, and the density over API 38.06. Although the oil Brent not as light or as sweet as WTI, it is also well suited for the production of gasoline and other fuels for internal combustion engines.
2. Dubai
This crude is the benchmark for light, sour crude from the Persian Gulf.. It has a sulfur content 2%, with density by API 31. Dubai brand oil is also known as Fateh and is used for pricing crude oil and exported to the Asian region.
3. Tapis
This oil is the benchmark for light sweet Malaysian oil.. The sulfur content is only 0,03%, and its severity by API is about 45,5 degrees. Although this brand is not used as a standard as widely as WTI и Brent, it is actively used as a landmark in Asia.
4. Bonny Light
The benchmark for Nigerian oil, s API near 36. Has a very low sulfur content
5. Isthmus
The benchmark for light oil from Mexico. The sulfur content is about 1,45%, API 33.74.
6. OPEC Basket
OPEC Basket : It is a mixture of seven grades of crude oil from OPEC countries and is used by OPEC to monitor the global terms of trade of the oil market..
Economists from the USA suggest that the pressure of the situation on the countries will increase - oil exporters, if oil prices continue to fall. Many major countries - oil consumers will have to change their energy consumption policy so that there are no problems due to the volatile situation in the oil market.
Recently, many countries - oil exporters were forced to radically change their economic policy, since the economies of these countries were based on oil exports, which accounted for most of the revenues to the budgets. At the moment, there is no significant improvement in the dynamics of oil prices and this puts pressure on the budget, as well as on the growth of public debt.
First of all, these countries paid attention to the diversification of the economy, to the development of business, to the export of production and consumer goods.. It is planned to develop the financial sector, reform public sector enterprises, strengthen institutions in various areas of the economy, invest in human capital, as well as attract private investment, especially in non-oil sectors.. Otherwise, the national reserves of gold and currencies, which serve to support and develop the economy, army and social areas, may approach critical minimums.
In particular, Russia is urgently engaged in a number of measures to reduce the dependence of the country s economy on oil exports - credit policy to reduce the economy s vulnerability to oil price surges. It is assumed that even in the event of an increase in oil prices, the situation will change slowly, due to the fact that prices will not rise too quickly and will not soon return to their maximums.
During the time when oil prices made up 45 dollars per barrel, balanced budgets of countries - exporters of oil left much to be desired, and already with a fall in prices below 30 dollars raises serious concerns. These countries budgeted a certain price for oil, from which the budget volume was predicted.. However, recent events completely violate this budgeting system due to the huge gap between the price that is included in the budget calculation and the real price that has arisen on the market.. In addition, it was previously assumed that oil prices would stop falling and give a quick rise to their previous positions, which affected the budgeting. Iraq and Libya were especially vulnerable economically, as well as Angola, which were not prepared for such a strong imbalance in income and expenses.. Venezuela has been particularly hard hit, with increased risks to the country s stability.. Loss of public order is possible, there is a risk of default, hyperinflation, currency control distortions have appeared. In all likelihood, this country cannot do without the support of international financial funds, but Venezuela has not established ties in this regard, and those that were before - violated.
The losses to the economies of countries are associated not only with the direct sale of oil, but also due to the deteriorating situation in the oil refining industry, falling incomes due to low prices and the production of products for which oil is the main source - gasoline, oils, fuel oil and plastics.
Falling oil prices also affected the commodity and stock markets. The fact is that most of the free funds from the sale of oil were invested in the commodity exchange and in the shares of companies.. With the fall in the price of oil, the cash flow towards investments fell sharply, and moreover, investment assets began to massively sell, which created a fall in commodity and stock prices in many markets..
At the moment, it is changing significantly dynamics of oil prices in the markets, as there was a significant reduction in oil supplies, which strengthened the market as a whole and increased positive sentiment on the exchanges. The oil price is getting closer and closer to the one that the countries were planning to put in their budgets. - oil exporters.
US oil producers have decided to cut back on work on the creation of drilling rigs and traders massively exited short positions in oil on the commodity exchange.
Low oil prices have made a strong correction in the strategy of development of drilling rigs and in the system of oil exploration and research. Earlier, many US industrial oil companies announced the reduction of work on the creation of oil rigs and the pace of work decreased for several months and reached the lows of the crisis years. Several operating unprofitable oil rigs were completely frozen. However, some forces were shifted to the completion of previously started work on efficient oil production.. Such large-scale changes influenced the oil market and triggered changes in the dynamics of prices for oil futures in the commodity markets..
The Ministry of Finance has developed a scheme to reduce the tax on the development of complex oil fields. Experts and industry representatives think this idea is correct. The funds saved on tax will go to the development of new deposits. However, the indicators chosen by the Ministry of Finance for calculations make it difficult to implement.. Ministry of Finance continues tax reform for hard-to-recover oil fields. New amendments to the Tax Code provide for a reduction in the mineral extraction tax rate for oil, depending on the efficiency and permeability of the reservoir, as well as the degree of depletion of the field.. For example, for fields with low permeability and the efficiency of an intermediate formation no more than 10 meters is set by the severance tax in the amount 0,19 from the standard rate for the period 10 years. For all shale oil fields, depleted by one percent or more, the MET is proposed to be zeroed at 15 years.
The main idea of the Ministry of Finance in the distribution of deposits into four categories, for each of which the MET rate is determined. Officials believe that lower mineral extraction tax values and the simultaneous use of new technologies for oil production can make fields with a low-permeability soil layer profitable.. At the same time, new taxes will increase the economics of projects and the investment attractiveness of deposits. Experts note that the process of administering new benefits will be quite difficult. It would be wiser to take integral indicators that characterize the quality of oil reserves. These characteristics are - rate of return on 1 ton of oil produced and oil recovery factor. The oil recovery factor determines the optimal technology for field development, and the profit rate takes into account the production cost, taxes, transportation costs and oil prices.. Experts argue that the effective reservoir thickness is not a characteristic of the quality of reserves and cannot be used to adjust the mineral extraction tax.. Experts fear that the proposed system of mineral extraction tax adjustments will make it possible to implement corruption schemes. For example, manipulations with different types of permeability are possible, since they are not specified in the document..
