Fallen Oil Price may be Beneficial
Posted on: 16/12/2014

The price of Brent crude oil has fallen below $59 a barrel for the first time since May 2009, causing concern amongst stakeholders of the oil industry. Whilst prices have almost halved since their high back in June due to an increase in supply and waning demand, Chancellor George Osborne has recently announced that this decline is “overall a very good thing” for Britain, the US and Western economies.

Osborne revealed that the new drops in oil price may stretch Vladimir Putin and his oil-dependent economy too far, creating new opportunities for British involvement in oil distribution and would exacerbate the effects of the sanctions already being inflicted on Russia following Putin’s interventions in Ukraine.

The chancellor commented that “This puts a lot more pressure on Vladimir Putin,” he said. “People had been asking whether sanctions are working, [and] can Putin ride this out with strong oil prices. I don’t think that looks so clear now. The Russian budget is heavily dependent on high oil prices. He might be exposed by this.”

However Russian energy minister Alexander Novak stated that they will not cut their production as a result of this, as Mr Osborne had hoped, “If we cut, the importer countries will increase their production and this will mean a loss of our niche market”.

Nevertheless Mr Osborne remains optimistic in the face of such comments, strongly believing that this most recent fall in the price of oil will result in positive outcomes for those working in support of the rule of law in Europe, something which Russia has been questioned about over the past year following their conflict with Ukraine.

Whilst the falling oil price is not something which we want to support here at Blueprint, the view from the Chancellor is encouraging as it offers hope that we will not necessarily suffer as a result of it.

For up to date news about oil and gas issues follow our twitter page @BlueprintOnG.

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