Oil vs. Putin. The price fall continues

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2014/11/27 • Russia

Article by: Vitaly Yeremitsa

Brussels – Russia’s economy is losing hundreds of billions of dollars in light of European sanctions and the decrease of global oil prices, state representatives of the Russian government. At the same time, the hopes Russians have for better news from the global oil market are not justified. On Thursday in Vienna, the assembly of the Organization of the Petroleum Exporting Countries (OPEC) was unable to agree on any limitations on extracting oil to artificially maintain the prices. 

The economic sanctions the West imposed on the Russian Federation turned out to be not the only challenge to the weak budget of this country which unfolded a military campaign in Ukraine. Another, much more effective blow to the Russian economy and its currency came on part of global oil prices, which have been falling consistently over the past several months. Oil and gas constitute about two-thirds of Russian export, which makes the ruble and other Russian assets very sensitive to the changes on the global oil market.

According to Russian Finance Minister Anton Siluanov, the Russian economy is losing 100 billion USD per year due to the sanctions and cheaper oil. Moscow hoped that the exporting states would agree to decrease oil extraction on November 27 at the OPEC assembly by using quota mechanisms.

However, these hopes did not come to life.

“The conference decided that exporting countries will continue to extract 30 billion barrels per day for at least another half-year. We are not sending any signals by doing this. We are just trying to establish a fair price,” stated General Secretary of the OPEC Abdalla Salem el-Badri at the end of the conference.

Abdalla Salen el-Badri is convinced that the price per barrel is currently low, but this does not necessitate immediate action. “We shall see how the market develops, and the next OPEC meeting will be held on June 5, 2015,” he said.

Exporters: price per barrel will continue to fall

12 oil exporting countries are part of the OPEC, in particular the United Arab Emirates, Qatar, Iran, Kuwait and others. Russia, Norway or Canada are not part of this organizations, despite being considered some of the biggest global exporters.

At the same time, the current biggest price fall in the past four years leaves no chances for the strengthening of the Russian ruble and will continue to influence the fund market, analysis say.

Starting June of the current year, the oil prices have fallen by about a third, having reached the historical minimum of $75 per barrel on Thursday. Experts predict that the price may reach $60.

Russian representatives claimed before they were planning to decrease oil extraction to influence the fall in price, however, experts now say they would not resort to such measures. The fact remains that besides the global oil extraction, which somewhat surpasses demand, shale fuel is becoming more and more popular.

Translated by: Mariya Shcherbinina
Source: Radio Liberty

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  • Paul P. Valtos

    Whatever we can do to put them out of business. Welcome to capitalism

    • Don Casavant

      Paul, you always the nail on he nail on the head !

    • Michel Cloarec

      OIL prices and rubles go together ! Falling down very low in the abysses !
      Putin can turn to BRICS for help ! And Turkey for help with the south stream pipeline Ha ! ha ! Another missfailure of mein herr putin

  • DejaVu

    Putin has contingency plans for $60 a barrel. However the lower the prices fall the more his currency reserves are used up and the more desperate he becomes. If this keeps up we will see a “Red Storm Rising”. Europe and America deserve it with their weakness and indifference towards Ukraine. Ukraine is Serbia 1914.

    • Milton Devonair

      “Putin has contingency plans for $60 a barrel.”

      Invade another country? He’s not finished with his last one and he’s not bled nearly enough…..

  • gmab

    Bravo! Keep on tumbling to $60 or less!

    • Milton Devonair

      Yup…..Crash and Trash the cesspool called russia.

    • LorCanada

      As of Nov 29-2014 it is $66. – I wonder where it will ‘come to rest’.

  • Dirk Smith

    putler is an abject failure.

    • Milton Devonair

      I prefer ‘rabid little chimpanzee’ but yours will work also.

  • disqus60

    Better than sanctions.. kill the income… now just to get Ukraine and other CIS countries energy independent

  • Kruton

    Drill baby drill!!

    • Murf

      That’s what’s the cherry on top of this irony cake. They need western oil companies to to do that because their Siberian oil fields will run out with in 20 years.
      I bet those sanctions aren’t looking so ineffective now are Vlad!

      • Milton Devonair

        Siberia wants to secede from the kgb mob in russia….so now would be a great time.

        • Murf

          Agreed!

          • Milton Devonair

            Would be good if China welcomed them as they are more aisan than northern european. Kazakhstan also should develop far stronger ties to China.

            lol….then watch the apes of russia chimpout at how unfair that is…..

  • Hektor Uranga

    The Russian Economy Ministry just tweeted a bizarre quote from Economic Development Minister Alexei Ulyukayev. On its official account on Twitter the ministry posted a picture of the minister alongside a quote saying — “We will not collapse!”.

    Here’s the tweet:

    Алексей Улюкаев: мы не рухнем! pic.twitter.com/QT4wu7BBEF— Минэкономразвития (@MinistryEconomy) November 28, 2014

    The move is highly unusual from a government ministry. It comes on the back of sharp falls in the value of the rouble and an announcement this morning that Russia is having to reduce expected government revenues from oil after OPEC declined to cut production on Thursday.

    Read more: http://www.businessinsider.com/russias-economy-ministry-we-will-not-collapse-2014-11#ixzz3KNvjjHhm

    • Milton Devonair

      thanks for the link.

      Now let’s all jump on the heads of russia, close that coffin and bury that miserable cesspool…..