By  Trend

The period of moderate oil prices can be more prolonged than assumed, Trend reports citing Moody’s 2019 Outlook for CIS countries.

"We assume that oil prices will increase during 2019, supported by the production cuts announced in December 2018 and range between $50-$70 per barrel in the medium term. This will support exports for Azerbaijan, Kazakhstan and Russia, and ongoing investment in the sector, such as in the Tengiz field in Kazakhstan," said the report.

However, Moody’s believes that the growth for CIS oil exporters will remain below rates seen early this decade, when oil prices were significantly higher.

"Moreover, recent falls in oil prices – reflecting higher production from Russia, Saudi Arabia and the US in the second half of 2018, weakening global demand and perceived downside risks to growth, in particular related to tensions between the US and China, and at least temporary exemptions to the sanctions on Iran – highlight CIS exporters' vulnerability to a potentially more prolonged period of moderate oil prices than we currently assume," reads the report.

In line with Moody’s forecast for slower global expansion, average growth for CIS oil importers will slow to 4.4 percent in 2019 from 4.6 percent in 2018.

While some oil importers will benefit as continued Russian growth supports remittances, imported oil price inflation will add to price pressures, according to the report.

Moody’s expects CIS economic growth to remain solid, averaging 3.9 percent for the region in 2019, with the potential for more stringent sanctions on Russia to disrupt regional trade and remittances.

"A heavy reliance on external financing exposes the region to tightening global liquidity, yet adoption of strengthened policy frameworks helps mitigate risks. Political tensions remain a key source of risk to economic stability and reform momentum in the region."