Russia can easily handle oil prices below $ 20

Bremer Landesbank's chief analyst, Volker Hellmeyer, has published an interesting analysis of oil prices. According to which countries such as Russia and Saudi Arabia will also be able to profitably extract oil at a price of $ 20, while the Western countries are threatened with disaster.

The fact is that the demand for oil continues to grow in 2015. Reducing demand could be much more of a concern. The fact is that new technologies are becoming more energy efficient and fossil fuels are being replaced by alternative means. Thus, the price of oil, as an economic indicator, loses its information content, compared to the time factor.

The fact is that the low oil price is a stimulant for the domestic sector, especially for the euro area. Producers will help prevent the financial crisis in this price crisis in order to be able to generate cash flows. This is the ultimate goal. The longer prices remain low, the more players will be eliminated, resulting in reduced supply.

The fact is that only in the Arab world and in Russia, at a price of $ 20 per barrel of oil, are they able to maintain production, taking into account operating costs. In addition, a drop in oil prices will be temporary, but during this period many companies may go bankrupt or stop production.

The cost of oil production in only 6 countries is below $ 20: Kuwait - $ 8.5; Saudi Arabia - $ 9.9; Iraq - $ 10.7 UAE - $ 12.3; Iran - $ 12.6 and Russia - $ 17.2.

While the UK has $ 52.5; Brazil - $ 48.8 Canada - $ 41; USA - $ 36.2. For the rest of the oil-producing countries, the prime cost is in the range of 23 - 36 dollars.