Opinion: The drop in world oil prices is a temporary process

Baku. 27 October. REPORT.AZ/ In recent years the drop in global oil prices is a temporary process and it caused by the objective and subjective, political and economic factors. In September 2014, oil prices in the world market began to fall, and in early October, the price of black gold fell below the psychological mark of $ 90 / barrel.

Analytical group experts of the Report Agency believe that in the long term oil price will only grow: "Firstly, world oil fields are limited, secondly, the need for energy is increasing annually, and oil is not a renewable energy source. Along with this, the possibilities of alternative energy, which is now being actively developed in many countries limited and unable to meet the growing needs of the global economy. In addition, today the production technology of alternative energy is very expensive, and this area remains a subsidy."

Analysts of Report oppose dramatizing the situation of falling prices in the world oil market and its impact on budget revenues of Azerbaijan, where the base price in the state budget for 2014 is $ 100 / barrel. Despite the negative growth rates in the world market, according to mid-October 2014, the average price on Azeri oil in the world market in the current year is still more than $ 100. At present this process is not a real danger for the main financial document of the country. And we can assume that for a long time, this indicator will be in a comfortable price range for Azerbaijan," experts of the agency say.

According to analysts, even under the most pessimistic approach - in the case of a protracted process of falling oil prices, Azerbaijan has sufficient financial resources to guarantee the stability of the domestic economy. So, as of October 1, 2014, the State Oil Fund reserves exceed $ 37.3 bln, and the Central Bank - more than $15 bln, for a total equivalent to 33 months of imports of the country.

"Let`s remember the beginning of the global economic crisis in 2008, when the price of oil has fallen to the level of $ 140 / barrel more than tripled. Even with such a difficult situation, the Azerbaijani economy has not shaken," say experts of Report. In addition, in recent years the government has taken comprehensive measures to reduce the economy's dependence on the oil sector. So, if in 2013 the share of non-oil GDP was 56%, in the first 9 months of 2014 that figure reached 58%.

On the other hand, analysts of the agency say that, protracted and deep process of falling oil prices is not profitable for producing countries. According to the international observers, the most comfortable price for exporting countries is estimated as $ 100 / barrel. In turn, the reduction in income of the oil is not profitable for the developed Western countries, which are major importers of modern equipment and new technologies in the countries exporting hydrocarbons. The OPEC countries, which control 40% of world oil production, as in previous years, can go to measures to reduce production quotas for member countries of the cartel. In addition, in recent years, the US government pays special attention to the development of shale oil and gas fields in the country. But according to the specialists of the industry, the development of shale deposits economically viable only when the world oil price is not lower than $ 75 / barrel. In the near future European countries wishing to minimize dependence from Russia plan to start the development of shale deposits.