However, crude prices are not likely to stay at current lows for long, as major oil producing countries are interested in reaching an agreement to cut production.
“The situation of oil-exporting countries is difficult at the moment. Particularly in countries like Russia and Venezuela which have huge macroeconomic problems on top of that. Since these countries’ economies rely on exporting oil, plummeting crude prices will make their already difficult economic situation even worse,” says economist Gitanas Nausėda of SEB Bank.
Fifteen OPEC and non-OPEC countries, including Russia, met in Qatar’s capital Doha on Sunday to discuss possible output freezes in order to shore up global crude prices. However, the meeting ended without an agreement.
Nausėda believes, however, that oil-exporting countries will try again and will eventually come to an agreement.
Meanwhile Lithuania, a net importer of oil, benefits from the current situation, he added. Consumers feel the benefits in cheaper fuel but it also benefits industry.
“If we go to a petrol station, we can see that oil prices are lower than any time before. True, it has also to do with the stronger euro against the dollar, because the global markets trade oil resources in dollars and later recalculate prices in euros,” Nausėda said.
Low oil prices are also beneficial for Lithuanian producers, allowing them to cut their production costs.