Nezavisimaya Gazeta
Falling Demand Could Bring Oil Prices Down
The International Energy Agency has reported an alarming trend: the demand for oil is declining for the first time since the 2008 crisis. The IEA cited several reasons including a warm winter, high hydrocarbon prices and the continuing eurozone crisis. The agency adds that the risk of recession in the leading economies further complicates the situation in the oil industry.
The IEA estimates that oil demand plunged by 300,000 barrels a day during the fourth quarter of 2011.
So far, oil prices are being pushed up by political and military risks like the crisis in Libya, a major oil supplier, and recent problems with Iran. The EU and the United States are considering an embargo on Iranian oil in their effort to stop Tehran’s nuclear program.
Iran responded to this threat by saying it would block the Strait of Hormuz, through which about 40% of ship-based oil distribution passes. This alone could send oil prices sky-high.
Independent analysts do not agree on the duration of the potential decline in oil demand. RusEnergy partner Mikhail Krutikhin said much depends on macroeconomics. “Economic growth in China, Japan and India has slowed, while the EU’s economy is approaching a recession. The United States is cutting oil imports and relying more heavily on domestic reserves,” he said.
“Recessions have already started in six eurozone countries,” former Finance Minister Alexei Kudrin said. “Forecasts indicate that a recession in the eurozone will be rather small, around 1%.” Kudrin believes that the sovereign debt problem will continue to grow, “possibly spreading to other areas.”
As the crisis grows and oil demand slumps, Russia, which depends on oil and gas for 48% of its budget revenues, will face problems. If oil prices and demand fall, Russia will have to export more natural gas. But if oil prices remain low for an extended period, gas prices will fall too, Krutikhin said.
“The pressure on oil prices will persist in the first quarter and at the beginning of the second quarter but prices will resume growth as soon as the emerging economies and the EU overcome their recessions,” said Alexei Matrosov, chief analyst at Broco. He admits that falling oil prices could have a negative impact on the Russian economy, which is why the World Bank downgraded its 2012 economic growth forecast for Russia from 4% to 3.5% early this year.
A revival in the demand for oil will depend on the emerging economies, in particular China, because high oil and gas prices have forced global economic leaders to rely more heavily on alternative energy, said Sergei Fundobny, chief analyst at Arbat Capital. He believes hydrocarbon prices will remain high as long as political and military tensions, including those with Iran, persist. “The demand for oil could decline but prices will likely grow,” he said. If so, the Russian economy, which depends heavily on oil and gas revenue, will have no problems in 2012.
Kommersant
Vladimir Putin’s Popularity Reaches 52%
Prime Minister Vladimir Putin’s popularity surged 10%, up to 52%, over the past month, which will surely guarantee him a sweeping victory in the first round of the upcoming election.
The ratings of the other presidential hopefuls remained unchanged, according to a recent VTsIOM poll.
The general approval of the government soared by mid-January compared with the end-of-year results, the pollster said. The number of people who approve of the president’s performance grew from 51% in early December to 57% and has maintained that level for a week. The prime minister’s approval level reached 58% last week and then crawled to 60% - a 9% rise over the December 10-11 level. The approval rating of the ruling United Russia party also increased from 35% immediately after the December parliamentary vote to 42%
Support for Putin as a presidential candidate grew even faster according to VTsIOM. The number of Russians who are ready to vote for him grew 10% to 52%, mainly due to those respondents who were undecided in early December or who had said they would not vote. The other hopefuls’ ratings were basically flat. Of the opposition candidates, Communist Gennady Zyuganov enjoys the greatest potential voter support at 11%.
VTsIOM analyst Mikhail Mamontov attributes the change to an evolving “political context:” the protest activity faded after the New Year and public mood became calmer. Putin’s election campaign, which is seen as “successful in many ways,” also influenced the results. “People want tough and effective government, capable of making strong statements,” he added.
Alexei Grazhdankin from Levada Center also admitted that protest passions had faded after the long holiday, that is, if the figures are reliable. He also gave credit to “ongoing pre-election propaganda.” Moreover, unlike the Duma elections where United Russia faced strong competition, Putin is seen by many as a no-alternative candidate.
“The massive protests sent Putin’s and United Russia’s popularity tumbling. People seemed somewhat euphoric at that point,” said Sergei Polyakov, editor of Political Technologies magazine. Nevertheless, and in spite of Putin’s flaws, most Russians see no alternative. “The political landscape has been cleared. Only those who have exhausted their political potential have remained,” Polyakov said, adding that Putin’s team has not taken any tangible campaign steps over the past month that would boost his popularity.
Moskovskiye Novosti
United Russia Is Ready to Share
On January 19 a closed meeting of United Russia’s three political policy groups discussed the party’s approach in a new political atmosphere. Its general council will meet in March to offer some specific reforms. In April, the next party congress is likely to approve its new organizational structure.
United Russia’s less successful performance in the Duma elections and the resulting loss of a constitutional majority in parliament prompted Vladimir Putin to actually ignore the party and turn to the Russian People’s Front. Finding itself in unfamiliar waters, the party may have to mend its relations with the opposition.
To quote political scientist Olga Kryshtanovskaya, “During the meeting, United Russia members divided into two groups: the alarmists like me and those who say the party has won the election and can relax.” Kryshtanovskaya believes that the party is in a state of confusion because the situation is a far cry from what it was before and that it is unclear where the center of authority is right now. In fact, United Russia is involved in the presidential campaign in the capacity of an organizational structure, while its image problems are entirely its own concern.
The policy groups are only a small part of the party, having only several dozen members each. The rest of the party membership is not involved in the debate on what is to be done next. One proposal at the meeting suggested that the policy groups be given the status of inner-party political platforms. General Council member Vladimir Medinsky even suggested that the status change should be made legal. This could actually lead to intraparty “parties.”
Sergei Mikheyev of the Political Situation Center says that the idea to divide United Russia into several branches has been discussed for quite a while. There are two possibilities: to keep one loyal party or to create three or four smaller, if equally loyal, parties. But a split, in his view, is out of the question. United Russia has a majority in the Duma and is needed to push through legislation.
He admits, however, that some members who are not entirely in agreement with the party could launch new party projects, all the more so now that a new law on political parties makes party registration much simpler. “There is no absolute unanimity in the party but there is a common strategic objective to keep the status quo,” says Mikheyev.
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