"I think the oil prices of $20-25 per barrel are gone forever. By the results of the year, oil prices will either stay at current levels or be higher, not lower," says Alexander Razuvayev, leading analyst with the Megatransoil company.
In his words, high oil prices "is a boon for Russia" promoting economic growth and increasing budget revenues. "However, we should not ignore some negative aspects of this. To pursue its currency exchange line, the Central Bank is forced to considerably increase money supply, which will lead to higher inflation. Therefore, the forecast of the financial authorities and leading investment banks, which projected this year's annual inflation at 10%, will not come true," Mr. Razuvayev noted.
When speaking about fundamental reasons for a rise in oil prices, Alexander Razuvayev mentioned two of them. "The first one is the growing demand for oil caused by the growth of the world economy (primarily, the rapidly developing economies of India and China). Meanwhile, it is impossible to increase supply in keeping with the demand. The second reason is a weak dollar. Instability in the Middle East also plays its role. As regards the situation around Yukos, I think that this is a short-term factor.
Yevgeny Suvorov, expert at the Zenit bank, also doubts that this year's annual oil prices will be below $30 per barrel. "I think that according to the year-end results, the prices will be at about $40 per barrel," Mr. Suvorov noted.
In his opinion, the rise in oil prices is, primarily, explained by the fact that the demand for oil "is growing faster than supply."
"This is also connected with the investors' fears of instability in oil supplies from the Middle East, as well as Russia (the destabilizing Yukos factor should also be taken into account). Besides, international analysts claim that there are not so much resources left for boosting oil production (the "taps" of export pipelines of the world oil cartel which provides 30 million barrels out of the 80 million of the world's daily oil demand have long been opened all the way," Mr. Suvorov said.
