The United States and Saudi Arabia may have conspired to keep crude oil prices down in order for the US to be in charge, according to the former first deputy chairman of the Russian Central Bank.MOSCOW, November 10 (Sputnik) The United States has likely conspired withSaudi Arabia tokeep crude oil prices down, the former first deputy chairman ofthe Russian Central Bank told Sputnik.
"[The US] is aboutto get the upper hand inthe market, and it warned Saudi Arabia it'd better change its pricing policy if it wanted tokeep its share ofthe market. Saudi Arabia took the cue that controlled oil price slashing was the best option," Oleg Vyugin, who now chairs the board ofdirectors atRussia's MDM Bank, said.
Vyugin added that if crude prices continued their climb beyond $100 a barrel, US oil production would surge tomore than10 million barrels a day, topping that ofSaudi Arabia and Russia, while the median price of $70-80 a barrel would lead toUS energy companies putting their oil production projects onhold.
According tothe economist, the trade-off betweenthe two key oil producers would allow Saudi Arabia todominate the energy market, while the United States would use lower oil prices topromote its political agenda.
"This policy curbs US oil production and lets Saudi Arabia keep its market," Vyugin opined, adding "as forRussia, it is a passive player, so what will be withit, will be."
"[The US] will cap oil production because ofthe low prices, while $80 per barrel will allow Saudi Arabia tostay afloat interms ofbudget obligations, atleast forthe next couple ofyears, because their budget is balanced atthis price and has almost a trillion dollars inreserve funds," the former Central Bank deputy chairman said.
Vyugin stressed that a deeper slump inoil prices would, onthe contrary, hurt the United States, Saudi Arabia and the Organization ofPetroleum Exporting Countries (OPEC), meaning the price was likely tobe no less than $70 to $80 a barrel. An adverse scenario, he said, could prompt oil producers tocut production quotas.
"It will not benefit the OPEC member states, so they will probably cut quotas," Vyugin told Sputnik.
Russian Economic Development Minister Alexei Ulyukayev said earlier he expected global oil prices tostabilize at $90 per barrel inthe medium-term, although there could be a short-term fall inprices in2015.
This comes asthe Russian currency onFriday set a new record, trading at48.65 tothe dollar and 60.27 tothe euro. On Monday, the Central Bank predicted zero GDP growth, assuming oil prices would not drop below $90 per barrel.
Russian Central Banks Ex-Deputy Head Predicts Ruble's 'Eventual' Recovery
The Russian national currency will eventually exit fromthe dive it began back inJune and emerge stronger, the former first deputy chairman ofthe Russian central bank told Sputnik.
"Will it hit rock bottom? It will eventually, butthe process will be difficult because the Russian market is organized ina wrong way, inwhich exporters provide foreign currency and investors don't buy Russian assets," said Oleg Vyugin, who now chairs the board ofdirectors atMDM Bank, Russia.
The economist did not rule outthe Central Bank intervention tosupport ruble and "punish" aggressive dollar buyers if it sees a threat tothe country's financial stability.
"The currency market will then enter a corridor ofvolatility and further rates ofruble growth or depreciation will depend onoil [prices] and politics. The more predictable these factors are, the less volatile the ruble exchange rate will be," Vyugin told Sputnik.
The pundit said that the current exchange rate ofruble measured againstforeign currencies would still be enough tocover Russia's external debt.
"Today's [exchange] rate againstthe dollar and euro can support the balance ofpayments that ensures debt payments, meaning that imports are likely todrop so low inthe next few days that the oil price of $82-85 a barrel will provide enough gains tocover all the debt," he explained.
Vyugin added he believed the ruble could eventually stabilize even withoutthe Central Bank's involvement assoon aspurported speculators inthe global Forex market decide topull outof a scheme tocapitalize onthe leaps inruble's exchange rate.
"The future scenario, asI see it, is that the ruble will be weakened untilsomeone appears inthe market, or maybe a big speculator decides toreap the profits fromselling huge amounts ofdollars and leaves. At that point the ruble will get stronger again," Vyugin suggested.
The Russian national currency set a new record onFriday, trading at48.65 dollars and 60.27 euros. On Monday, the country's Central Bank predicted zero GDP growth, assuming oil prices would not drop below $90 per barrel.
By Sputnik News
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