The opening of trading on Monday, March 23, was marked by a strong drop in oil prices. According to the newspaper “Izvestia” with reference to the dataexchanges, losses ranged from 8 to almost 10%.
By half past one Moscow time, May futures of the North Sea mark Brent lost 8.22% and were trading at $ 25.13 per barrel. Futures for the Texas WTI fell 9.89% to $ 21.32 per barrel.
The day before, Russia’s First Deputy Prime Minister Andrei Belousov called representatives of Saudi Arabia responsible for breaking the OPEC + deal, which provoked a drop in oil prices. According to the official, Moscow was against breaking the agreement, but the Saudis decided to exit the deal.
Russian Prime Minister Mikhail Mishustin said that it was not the Russian Federation that initiated the withdrawal from the OPEC + agreement. According to him, Moscow proposed to extend the deal until the end of the second quarter or until the end of this year.
“Russia’s position on the OPEC + deal was calibrated and agreed upon,” said the head of government.
Mishustin also added that the situation in the Russian economy is currently being controlled, although global markets are in a fever. The government is taking measures to stabilize the situation.
Since April 1, oil-producing countries have no obligations to reduce production. Amid this news, oil prices fell by 30% on March 9th. This has not happened since 1991 – when during the Gulf War, Iraqi forces set fire to Kuwait’s oil fields.
March 14, Russian Finance Minister Anton Siluanov said that the Russian budget will lose about 2 trillion rubles at currentquotesoil. He estimated the budget deficit at 0.9% of GDP. Siluanov believes that state revenues will decline after Russia withdraws from the OPEC + deal and fluctuations in the oil market. A significant part of 2 trillion rubles. planned to replenish the National Welfare Fund.
At the same time, the Minister of Finance emphasized that all budget obligations will be fulfilled – there is plenty of money for this.
Earlier, First Deputy Prime Minister Andrei Belousov said that Russia would have to rely on a new oil price of $ 35 per barrel. The country, the minister added, will need to “live in a new sustainable reality.”
“Frankly, I think that we have entered a fairly new sustainable reality and for some time we will have to live at approximately equilibrium prices of about $ 35, plus or minus,” he said.
Belousov also said that the long-term finding of oil prices in the region of $ 20 per barrel “no one needs.” At the same time, he noted that the Russian economy may not reach the planned growth rates. In drawing up the RF budget for the current year, the government proceeded from the price of $ 42 per barrel.
Meanwhile, The Spectator reports that a collapse in oil prices could be a “fatal blow” to the American shale industry. The “oil war” between Saudi Arabia and Russia will negatively affect the status of the United States as an exporter of “black gold”.
If earlier the United States was profitable for low oil prices, now America has become a net exporter of oil, so it has new weaknesses that it has to check, the newspaper notes.
However, the White House seems to be pleased with the drop in oil prices. At least US President Donald Trump noted that oil prices are at such a level that he could only dream of. He explained his reaction by expecting a decrease in the cost of gasoline. In addition, reports The Washington Post, Trump instructed the US Department of Energy to purchase a lot of crude oil at a cheap price.
On March 20, Bloomberg reported that
Russia is not going to ask for a truce in the oil war with Saudi Arabia. Moscow had been preparing for the crisis for a long time and understood that after the OPEC + deal was disrupted, world oil prices would fall to $ 20 per barrel.
According to the interlocutors of the publication, Russia has enough reserves to hold out longer than the Saudis, so it will not offer peace. In addition, according to sources, Russian leader Vladimir Putin is an experienced politician who “will be able to get out of this crisis.”
“Putin does not give up, even if the fight costs him dearly,” one source said. However, earlier both Russian and Saudi officials told reporters that there was no oil war between the two countries.
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