Think the price of oil can remain sky-high amid a U.S. recession, a global economic slowdown, and the worst credit market conditions in decades? Think again.
Oil prices are headed back to $50, according to analyst at an investment firm based in Russia.
Chris Weafer, analyst at Uralsib Capital in Moscow, said the Russian market is projecting that oil prices will plunge to about $50 per barrel, The Wall Street Journal reported Tuesday. Amid a U.S. recession and a global economic slowdown, oil has fallen about 38% to $91.07 per barrel after hitting a record high of $147.27 per barrel in July.
Oil price projections are especially important in Russia because oil revenue has provided much of the capital for Russia's development, economic expansion and funds for the Russian Government's programs.
Further, Weafer now expects Russia's GDP growth to slow to 3% in 2009, as global growth and the financial crisis slows both foreign demand for oil and commercial activity in Russia, The Journal reported. In turn, that will force Russia's government to reduce spending for certain programs, while eliminating funding for others, Weafer added.
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