Global oil cut likely to hit Russian economy

MOSCOW: A global deal on output cuts between OPEC and non-OPEC countries to shore up oil prices may hit Russia´s economy in 2018, the central bank said in statement on Friday.

The Organization of the Petroleum Exporting Countries, along with other large exporters including Russia, have agreed to maintain a joint restriction on crude supply for a second year, to reduce stockpiles and support prices.

Russia has said it will cut 300,000 barrels of oil output per day from its peak production of 11.247 million barrels reached in October 2016.The central bank said the curbs were likely to impact the overall economy.

It added that fossil fuel consumption by cars was expected to peak in the mid-2020s, which would significantly hit oil prices.

"We assume that the OPEC+ deal along with weaker demand for natural gas from abroad will temporary curb a growth in (Russian) production which may have a negative impact on economic growth in general," it said.

Russian gas firm Gazprom´s exports to countries outside the former Soviet Union fell 10 percent year on year in January, caused by relatively warm weather in Europe.

The central bank said Russia´s GDP was expected to rise by 0.4 percent quarter-on-quarter in the first quarter, accelerating to 0.5 percent in the second. Growth in 2017 would be revised upwards from an initial estimate of 1.5 percent.