The oil war: Russia faces a repetition of the default of 1998 with oil for $ 10Dwain Ross 17 / February / 20 Visitors: 34
Experts do not see the revival of the country's economy, making gloomy forecasts
Coronavirus is a coronavirus, and oil is above all. Global energy players, even against the backdrop of a threat to the world order, continue cunning multi-ways to raise the price of oil, and it has almost fallen to the level of 1998, when the country defaulted. Then the oil price reached $ 10 per barrel, now Urals oil drops to 13. What is happening and is there a limit to this?
On Sunday, news feeds stirred up a message about an attack by Hussite Yemeni insurgents on the Saudi capital Riyadh. However, there were no casualties (two were slightly injured), oil infrastructure was not damaged, so the diversion did not shake the cost of oil. Moreover, she continued to fall. Although, incidentally, the Saudis directly accused Iran of organizing an attack on Iran, which was vitally interested in the rise in oil prices (Iran’s state budget is balanced at an oil price of $ 50).
No less important news for the global energy market came from Venezuela, where Rosneft suddenly turned off all of its projects. True, Russia did not refuse to support the regime of Nicholas Maduro: Rosneft announced that it was selling its assets to a state-owned company. Most likely, this is a Roszarubezhneft company: it was established on March 28 by the Russian Federation in the person of the Federal Property Management Agency with an authorized capital of 322.7 billion rubles.
Most likely, it was precisely these two facts that the American President Donald Trump had to urgently discuss with Vladimir Putin. We spoke, of course, about coronavirus, but obviously the situation on the oil market worries both presidents much more - both, unlike the Saudis, are interested in maintaining high quotes.
In the current situation, Russia will have enough political will and financial resources to continue its bold multi-way approach, "Free Press" asked our permanent experts.
None of OPEC tried to resume negotiations
“SP”: - What do you think, how much longer can this period of uncertainty related to oil prices last? And is it only associated with coronavirus?
- At the moment, it is difficult to make any forecasts regarding the end of the period of uncertainty in oil prices. This week, investors will focus on the March index of business activity, which will show the current dynamics in the economies, especially the Chinese, as you need to look at the pace of recovery of the Chinese economy after quarantine, ” says Vyacheslav Abramov, director of sales of the BCS Broker financial company. - As you can see, so far none of the OPEC + countries and the USA have taken any concrete measures to resume negotiations, and on April 1, the deal will end.
"SP": - And what will happen after that?
- I think that in the current situation, the imbalance of supply and demand can be about 10-15 million barrels per day, which will lead to the filling of storage facilities after 2 months.
At the same time, it is worth adding that Union Texas Petroleum (one of the largest oil and gas producing companies in the USA) has already expressed its readiness to reduce production by 10% if there is a new OPEC + deal.
“SP”: - Why didn’t the markets react to the aggravation of the situation in the Middle East?
- There are several reasons. The conflict began a long time ago and periodically aggravate situations, such as, for example, on February 15, when the Hussites shot down a military aircraft on the border of Saudi Arabia and Yemen. Now, ballistic missiles were shot down on approaching Riyadh, no one died, so attention is now less focused on this.
The dollar can jump to 115 rubles
“SP”: - Everyone, of course, is interested in what will happen to the global economy in April.
- In April 2020, I predict a slight drop in the ruble. The external background is negative: the closure of borders due to the coronavirus pandemic, lower oil demand and the collapse of OPEC +. But there is a positive: support for the ruble exchange rate by the Central Bank and a tax period that will lead to the sale of currency by exporters to pay VAT, ” says Vitaly Mankevich, president of the Russian-Asian Union of Industrialists and Entrepreneurs. - Payments on external debt in April will amount to $ 3.7 billion, which will not create additional pressure on the ruble.
However, it is worth noting that the budget for 2020 is based on the cost of a barrel of oil at $ 57 dollars and the dollar exchange rate of 65.7, and the budget rule works at a cost of $ 42.4 per barrel of the Urals, that is, at a price lower, the government will spend reserves.
“SP”: - How much will the ruble cost?
- The dynamics of both oil and the ruble depends on the situation with the spread of coronavirus in Russia and in the world. Since the peak of the incidence rate has been passed only in China, and production everywhere is closing in Europe, the United States, and Southeast Asia, a further fall in demand for energy resources should be expected.
In April, I forecast a dollar exchange rate of up to 85 rubles. At the same time, I do not exclude the possibility that force majeure could lead to an even more serious drop in oil demand to $ 15−20, which could lead to a drop in the ruble to 100−115 per dollar.
Global players must act in concert
- The period of uncertainty in global markets may well last from 3 to 6 months. While no one understands and cannot realistically calculate the consequences of coronavirus and the introduction of universal quarantine, commodity markets remain under pressure, - says Nikita Ryabinin, head of the Luxembourg office of the KRK Group international consulting corporation. - What new anti-records will the oil markets and other commodity platforms set? We are already seeing new horizons of $ 13 dollars per barrel. How and when will the market recover? This will directly depend on both the demand, which has currently fallen by a quarter, and on the coherence and decisiveness of the actions of the main players in the market.