Oil Market: New Reality

Abstract

Amid low crude oil prices resulting from the excessive supply over demand, oil production at high-cost deposits began falling, drastically decreased investments in the development of non-traditional deposits including shale oil in US. However, falling oil production at the high-cost deposits is off set by the oil production growth in leading OPEC member states, which aim for expanding their oil market share. Russia has also increased oil supplies: in 2015, its oil production peaked its maximum over the period since 1990 and the oil export has reached its all-time record. Moreover, due to the lifting of sanctions on Iran one should expect a significant increase of supplies from that country. On the whole, the oil market outlook is characterized by predominance of factors, which will contribute to preservation of low world oil prices.

Keywords: Russian economy, oil market, demand, supply

JEL Classification: L71, L72