Against the backdrop of an unstable situation in the global hydrocarbon market, where the largest drop in oil futures over the past 30 years has occurred, an increase in the dollar and the euro against the ruble has been recorded. This is evidenced by trading data.
As of 08:50 Moscow time, the dollar is trading for 72.79 rubles, while at the previous close of trading, the currency was worth 69.4 rubles. Thus, the ruble lost 4.5%.
At the same time, the euro grew by 3.26% to 82.8 rubles. For both foreign currencies, these are the maximum values since 2016.
Note that in Russia Monday, March 9, is a day off, so trading on the Moscow Exchange, which are the main ones for the ruble exchange rate, will begin only at 10:00 Moscow time on Tuesday, March 10.
The last time at the Mosbirzhe dollar was more than 70 rubles in September 2018 in connection with U.S. sanctions in the Skripals case. The euro then reached almost 82 rubles. At the same time, the historical minimum was recorded in January 2016, when the dollar was trading at 85.75 rubles and the euro at 93.60 rubles.
It is worth noting that the world energy market has seen the strongest drop in oil futures since 1991, that is, since the Persian Gulf War.
So, Brent crude oil for delivery in May 2020 on the ICE exchange in London lost in value over 28%, falling to $ 32.2 per barrel. In addition, April WTI futures fell 31.3% to $ 28.3 a barrel. Thus, the minimums of January and February 2016, respectively, were updated.
As Bloomberg predicts, citing a report by analysts at Goldman Sachs, an American investment bank, the price of a barrel of oil could drop to $ 20, which will completely change forecasts for energy markets. It is noted that its participants have already adjusted their expectations for the second and third quarters to $ 30 per barrel.
“We believe that OPEC and Russia started a price war this weekend. The forecast for the oil market is even more deplorable than in November 2014, when such a price war started for the last time, since we are talking about a significant drop in oil demand due to coronavirus, ”the report says.
- Reuters
- © Lucy Nicholson
Recall that on Friday, March 6, in Vienna, two-day negotiations on the OPEC + deal ended. It was first concluded at the end of 2016 to restore the balance of supply and demand, and to keep oil prices from significant fluctuations. At the same time, from January 1 to March 31, 2020, OPEC + participants, including Russia, reduced production by 1.7 million barrels per day compared to the level of October 2018. However, following the results of the current consultations, it was decided to continue cooperation, but already without commitments to reduce the production of energy from April 1.
“As for the reduction, probably, taking into account the decision made today from April 1 of this year, none of the countries that are members of OPEC and non-OPEC have any obligations to reduce,” said Russian Energy Minister Alexander Novak.
According to him, the increase in oil production in the Russian Federation from April will depend on the plans of national companies.
At the same time, Saudi Arabia, according to media reports, intends to increase oil production in April to 10 million barrels per day, while it notified buyers of raw materials from the United States, Northern Europe and Asia about the reduction in supply prices.
The American publication The Wall Street Journal, citing sources in the Organization of Petroleum Exporting Countries (OPEC) and unnamed Saudi authorities, claims that such a move by Riyadh "is an element of an aggressive campaign to seize the share of the Russian market segment." The kingdom took such a step after the failure of the negotiations held in Austria.
As a spokesman for Rosneft Mikhail Leontyev said, the agreement with OPEC + does not make any sense to Russia, since the volume of Russian oil was replaced by American products.
“From the point of view of Russia's interests, this deal is simply meaningless. By yielding our own markets, we remove cheap Arab and Russian oil from them in order to clear a place for expensive shale American. And to ensure the efficiency of its production, ”RIA Novosti quotes him.
He stressed that even in these conditions, consensus could be reached in Vienna, but the proposal of the other side was not partnership.
“Our volumes are simply replaced by competitors. This is masochism, ”said a spokeswoman for Rosneft.
Amid falling oil prices and the ruble, the Bank of Russia decided not to buy foreign currency on the domestic market to implement the budget rule mechanism within 30 days.
“This decision was made in order to increase the predictability of the monetary authorities and reduce the volatility of financial markets in the face of significant changes in the global oil market,” the Central Bank said.
In turn, the Ministry of Finance of the Russian Federation explained that while maintaining steadily low oil prices, the guarantee of the fulfillment of all government obligations and the preservation of macroeconomic and financial stability is the availability of a sufficient volume of liquid assets in the National Welfare Fund. As of March 1, it amounts to more than 10.1 trillion rubles ($ 150.1 billion) or 9.2% of GDP.
“These funds are enough to cover the shortfall in income from falling oil prices to $ 25-30 US per barrel for 6-10 years (taking into account revenues under the damper mechanism),” the Finance Ministry said.