Russia Defence Forum

Would you like to react to this message? Create an account in a few clicks or log in to continue.

Military Forum for Russian and Global Defence Issues


+39
Viktor
Austin
sepheronx
RTN
Flyingdutchman
As Sa'iqa
par far
arpakola
higurashihougi
NationalRus
NickM
Mindstorm
Mike E
Vann7
George1
MotherlandCalls
Regular
KomissarBojanchev
syxthtysyxthsyx
fragmachine
zino
medo
TheArmenian
collegeboy16
mutantsushi
Firebird
navyfield
dino00
TR1
Asf
AlfaT8
Morpheus Eberhardt
Cyberspec
zg18
GarryB
Zivo
Werewolf
macedonian
magnumcromagnon
43 posters

    Russian Economy General News: #2

    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Wed Oct 15, 2014 2:57 pm

    But here is something not making front headline news:
    http://www.zerohedge.com/news/2014-10-15/us-european-stocks-collapse-oil-tests-80-handle-10y-hits-215

    And

    http://www.zerohedge.com/news/2014-10-14/if-oil-plunge-continues-now-may-be-time-panic-us-shale-companies

    Hence why I dont think it is some deviant plan by US and Saudi. Saudi is far more reliant on oil than Russia and some major economies like US will face a massive problem as Shale requires around $85 to break even. That isnt even profit.
    avatar
    Asf


    Posts : 472
    Points : 491
    Join date : 2014-03-27

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Asf Wed Oct 15, 2014 3:01 pm

    Russian budget base Oil price is $96 for Ural , If Ural reaches says $80 and stays there ( it as nearly $83 now for ural ) then Russian budget would need $32 billion from Reserve fund

    USA's shale gas/oil companies are loosing money too


    CB has to step in to sell $$$

    Which isn't good for USA either

    Actually, I think oil price drops because of world economy problems. Which means everybody will suffer, not only Russia. This isn't a new USA-Saudi conspiracy.


    Fall in Ruble has allowed various companies to profit greatly.

    All non-oil/gas export companies. Actually, oil price drop is profitable for russian citizens too (for some limit of course) as fuel prices drops, making goods (and russian-made one at the first place) cost less.


     in order to gain same amount of $$$, then Russia needs to export more

    I doubt Russia really need more $$$ as dollar is just an exchange agent. Actually, it's not an oil price go down, it's 'price of dollar' go up. It's kinda like that - world's economy go down => less money on fuel for everything, less money on oil market speculations => more money on dollar market speculations
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Wed Oct 15, 2014 3:27 pm

    Depends on what industry. Oil is major use in creation of composite materials and energy products like compact generators, or electronics industry.

    Since Russia is a massive producer of composite material, this could mean a massive drop in costs in creating composite materials and plastics for every day use and thus, reducing cost of the final goods and theoretically increasing sales.

    As well, Russia is forever pushing into the semiconductor field either through its own or foreign companies. In this case, oil prices being low will mean lower costs on semiconductors from Russia.

    If Russia really wanted, they could start subsidizing the oil industry and any company that uses heavy oil for production, in order to increase production and profit for these companies. Maybe even subsidize gas prices to increase the amount of drivers and fuel consumption.
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Wed Oct 15, 2014 3:40 pm

    https://uk.finance.yahoo.com/news/italy-lifts-recession-thanks-hookers-125450203.html

    See, maybe Russia should take the economics from the UK and Italian handbook and do the same. Then the world will praise how economically diverse Russia is.
    Hannibal Barca
    Hannibal Barca


    Posts : 1429
    Points : 1439
    Join date : 2013-12-13

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Hannibal Barca Wed Oct 15, 2014 3:46 pm

    This is desperation. When you see something like this you know the end is near. They will not fοοl anybody.
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 2:02 pm

    State Duma deputy called record military spending in 2015 budget

    Читайте далее: http://www.vedomosti.ru/politics/news/34801791/deputat-gosdumy-nazval-rekordnymi-voennye-rashody-byudzheta


    The draft budget in 2015 on national defense planned record expenses in the amount of $ 3 trillion 286.8 billion rubles. On this "Interfax-AVN," said the chairman of the Duma Committee on Defense, Admiral Vladimir Komoyedov . He noted that defense expenditure is equivalent to 4.2% of GDP, expenditures for 2015 exceeded that of 2014 to 812.16 billion rubles. In 2016, defense spending is planned for 3 trillion 113.24 billion rubles. (3.7% of GDP), in 2017 - 237 820 000 000 3 trillion rubles. (3.6% of GDP). "This is significantly higher parameters of 2014, when the share of GDP was 3.4%, in 2013 - 3.2% and in 2012 - 3.0%", - said the admiral.


    According Komoyedov, the bulk of the Ministry of Defence spending will go on the key activities of the army and navy, including the further re-new models of weapons, military and special equipment, social protection of servicemen and other tasks.

    "However, the costs of operation of the armed forces in the open planned in 2015 in the amount of 806.86 billion rubles only., A decrease of 60.5 billion rubles. Than in 2014   (867.37 billion rubles.), 2015 and 2016. - In the amount of 843.7 billion, respectively, and 770.2 billion rubles. "- He added. For the payment of money allowances to servicemen in the budget laid programming 440,100,000,000 rubles. in 2015, 483.6 billion rubles. - In 2016, 435.2 billion rubles. - 2017


    Profile Committee at the conclusion of the draft budget recommended to consider a number of problematic issues, including the allocation of budgetary resources to the rear costs, particularly for clothing for servicemen.

    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 2:16 pm

    via STRATFOR

    [url=https://www.addtoany.com/share_save#url=http%3A%2F%2Fwww.stratfor.com%2Fgeopolitical-diary%2Foil-prices-continue-define-geopolitics&title=Oil Prices Continue to Define]Russian Economy General News: #2 - Page 31 Strat-share[/url]
    Oil Prices Continue to Define Geopolitics

    http://www.stratfor.com/geopolitical-diary/oil-prices-continue-define-geopolitics

    Editor's Note: Oil prices dropped steeply Oct. 14, with crude oil futures falling 4.6 percent to $81.84 per barrel -- the biggest decrease in more than two years. Brent crude dropped by more than $4 a barrel at one stage in the day, dipping below $85 for the first time since 2010. While these are relatively substantial drops, they are just one part of a continuing trend Stratfor has been tracking over the past few months. Factors behind the slump include weak demand, a surfeit of supply and the fact that many large Middle Eastern producers are reluctant to reduce their output.
    In light of today's developments, we are republishing the following diary from Oct. 2, which details the reasons behind the falling prices and how the drops could affect oil-dependent countries around the world.


    The global oil benchmark, Brent crude, fell Thursday to about $92 per barrel before rebounding to finish the day at around $94 per barrel, the lowest price since mid-2012. The latest sell-off follows one of the sharpest declines in a quarter in recent years, in which the price of oil slid about 16 percent. It may be premature to forecast sustained international oil prices lower than $90 per barrel, but if the price of oil remains close to where it is now, many oil exporting countries will feel the pain after basing their budgets on previous price expectations.

    Simply put, the oil market has gotten overstocked. After spending much of the year producing only around 200,000 barrels per day, Libya has seen its production jump up by about 700,000 bpd since mid-June. The United States has continued its relentless expansion of oil production, with the latest Energy Information Agency figures estimating that U.S. production has increased by about 300,000 bpd since the beginning of August, and Iraq has experienced similar gains. Russia, Angola and Nigeria have also seen marked boosts in production. While most of the recent production increases are one-offs, North America could add another 1 million to 1.5 million barrels of production by the end of next year.

    Despite these noteworthy hikes in oil production, sluggish demand by European and Asian (particularly Chinese) consumers has proved just as important to oil prices. While China's demand will continue to grow, demand in developed countries will remain flat, as it has for a while. These factors only add to the concern that if left unchecked, oil prices per barrel in the $90-$100 range may persist for the foreseeable future.

    Lower global oil prices will create challenges for several OPEC producers and others, particularly Russia. While some have suggested that OPEC will lower its production targets, it may not have the ability or the unity to coordinate a large enough drop in production to counter trends elsewhere and bring prices to a level more desirable to it (above $100 per barrel). If oil prices do return to this level in the near future, it likely will have little to do with OPEC's actions.

    The Standoff Between Russia and the West


    The first and most import consequence of lower oil prices is the effect it will have on the ongoing struggle between Russia and the West. Energy commodities dominate the Russian economy, particularly its exports. Any sustained drop in oil prices would directly impact the country's export revenues, and Russia's GDP would take a significant hit. The Kremlin's 2014 budget was based on oil prices averaging $117 per barrel for most of the year, with the exception of prices of $90 per barrel for the fourth quarter. For 2015, however, the budget has been pegged at $100 per barrel after much debate within the Russian leadership. While Moscow has significant financial reserves and can run a budget deficit if need be, Finance Ministry officials have estimated that lower oil prices could shave off 2 percent of Russia's GDP.
    Although Russia has been able to weather the effects of U.S. and EU sanctions thus far for its action in Ukraine, the restrictions have already led some firms, such as Rosneft, to ask for financial assistance from the country's National Wealth Fund. A reduction in oil prices, and in turn lower revenues for Russia's budget, will constrain the Kremlin's ability to support Russian businesses hurt by sanctions the longer they are in place. With less of a financial cushion to soften to consequences of sanctions in the longer term, the Kremlin will have to moderate its position in the ongoing negotiations over the future of Ukraine to meet the demands of Western partners and achieve a reduction in sanctions.

    Competition in the Middle East


    As the West looks to gain from low oil prices in its struggle with Russia, it is also looking for an opportunity to negotiate with a beleaguered Tehran to come to some sort of a resolution on the Iranian nuclear program. For Europe, Iran and its large natural gas reserves represent one of the most promising long-term sustainable alternatives to Russian natural gas. Tehran is facing sanctioned export volumes, lower profit margins and ongoing expenses because of proxy conflicts in Syria and Iraq, and it can ill afford a sustained downturn in global oil prices. Progress on coming to an agreement with the West may be slow, which will only place more pressure on Tehran to negotiate.

    Saudi Arabia is also set on maintaining its global market share and has an opportunity in the short term to rely on its considerable foreign exchange reserves and low production costs to wait out other global producers. Riyadh's oil output is its most strategic resource, and one that the government is quick to use to its advantage. With summer temperatures beginning to cool and regional consumption starting to taper off, Riyadh can free up larger volumes to export, even at lower prices. The Saudis are also looking to leverage their short-term economic stability over rivals such as Russia, especially as they square off with Iran over the future of the Syrian government.

    Saudi Arabia also has the ability to take a considerable number of barrels of oil offline if it wants to. Recently, however, it has offered discounts on its crude oil to secure market share for November, perhaps signaling to other OPEC members that while Riyadh may be willing to take its supply offline, others will have to do the same. But there is no incentive for other countries to reduce their output, since most Gulf producers will still manage to make a profit in the $90-$100 per barrel range; lowering production levels, therefore, would only reduce revenues.

    The Americas and Beyond


    Outside the Middle East, a decline in oil prices will also affect Venezuela. Officially, Caracas sets its budget at the low target of $60 per barrel of oil, a precedent begun by former President Hugo Chavez. Excess revenue could then be funneled elsewhere to off-budget expenditures to satisfy political patrons. Venezuela is in a dire financial position, needing oil prices perhaps as high as $110 to meet expenditures both on and off the book. Sustained low oil prices would severely hamper Caracas' ability to finance its imports, perhaps forcing government officials to get serious on selling foreign assets, such as Citgo, and gold from its central bank reserves, or offering even more attractive terms on loans for oil deals with the Chinese, though Beijing has recently balked at this. If oil prices stay low for an extended period, Caracas could also be forced to reconsider its deals with Cuba or programs like Petrocaribe.
    Meanwhile, for developed massive oil importers -- Japan, China, India and the European Union -- low oil prices will give some respite to significant import bills. On the other hand, prices could also increase short-term strain in Europe, where energy has been the main factor pushing monthly inflation lower. While lower energy costs are good for Europe in the long run, they also raise the threat of deflation and inflame tension between the European Central Bank and Germany.

    Even though prices have likely bottomed out, the recent plunge in the price of oil serves as a reminder of how geopolitically significant energy prices can be. Energy supplies form the backbone of modern industrial economies, and energy resources are critical export commodities for those who possess a lot of them. As long as fossil fuels remain the dominant source of energy -- something that is likely to last at least another few decades -- oil supply and oil prices will remain critical.


    Read more: Oil Prices Continue to Define Geopolitics | Stratfor
    Follow us: @stratfor on Twitter | Stratfor on Facebook
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 3:08 pm

    I got a question for all you people: have you seen a drop yet in prices at the pump? It was $1.20/L here but now $1.16/L. Barely a drop compared to oil itself.

    I have a feeling they are mitigating the issue of lower oil costs at the pump.
    I also heard a rumor that Saudi Arabia oil companies have huge stakes in various gas pumps around the world and that prices stay up because of them. I was hoping prices would drop.
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 3:13 pm

    For countries that import Oil no drop in Oil Price would mean Government would save budget money allocated to oil so there could be Budget Surplus or lower Budget Deficit than projected like in case of India.

    We had projected Budget Deficit of 4.1 % of GDP , If Oil price stay low till March 2015 then we can expect a lower budget deficit thanks to low oil price.
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 3:38 pm

    Austin wrote:For countries that import Oil no drop in Oil Price would mean Government would save budget money allocated to oil so there could be Budget Surplus or lower Budget Deficit than projected like in case of India.

    We had projected Budget Deficit of 4.1 % of GDP , If Oil price stay low till March 2015 then we can expect a lower budget deficit thanks to low oil price.
    If not lower it, at least they can import more for the same price.

    But have you seen a change at the pumps in India?
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 4:09 pm

    sepheronx wrote:
    Austin wrote:For countries that import Oil no drop in Oil Price would mean Government would save budget money allocated to oil so there could be Budget Surplus or lower Budget Deficit than projected like in case of India.

    We had projected Budget Deficit of 4.1 % of GDP , If Oil price stay low till March 2015 then we can expect a lower budget deficit thanks to low oil price.
    If not lower it, at least they can import more for the same price.

    But have you seen a change at the pumps in India?

    By very small amount Rs 1 or so

    http://indiatoday.intoday.in/story/petrol-price-reduced-1-per-litre-ioc-fuel-diesel-rates/1/395772.html


    The Indian Government will rather use this opportunity to reduce its budget deficit rather then pass the full benefit to the customer.
    AlfaT8
    AlfaT8


    Posts : 2161
    Points : 2156
    Join date : 2013-02-02

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  AlfaT8 Thu Oct 16, 2014 4:16 pm

    sepheronx wrote:I got a question for all you people: have you seen a drop yet in prices at the pump? It was $1.20/L here but now $1.16/L. Barely a drop compared to oil itself.

    I have a feeling they are mitigating the issue of lower oil costs at the pump.
    I also heard a rumor that Saudi Arabia oil companies have huge stakes in various gas pumps around the world and that prices stay up because of them. I was hoping prices would drop.
    Don't know anything about the Suadi, but i can tell you with absolute certainty that here in the ABC islands there has been no significant drop whatsoever (4.3 cent drop), when oil prices go up the Gov. blames the global oil prices, but now that its gone down i don't hear a peep, to say nothing of the price of electricity.


    Last edited by AlfaT8 on Thu Oct 16, 2014 4:22 pm; edited 1 time in total
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 4:17 pm

    1 rupee decline? What is the nornal price? I heard different stories but my bro in law gets military price or something to that effect. But average person pays what?

    Yeah, I thunk pump prices will stay the same to mitigate any loss from oil drop and Indian gov can use opportune time to increase revenue.
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 4:28 pm

    sepheronx wrote:1 rupee decline? What is the nornal price? I heard different stories but my bro in law gets military price or something to that effect. But average person pays what?

    Yeah, I thunk pump prices will stay the same to mitigate any loss from oil drop and Indian gov can use opportune time to increase revenue.

    If you bro-in law is in Armed forces or have relatives there then they might be getting reduced rates.

    Indian Gov runs high budget deficit projected to be 4.1 % this year so low oil price means they might reduce it further , Modi will claim I did it Very Happy
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 5:27 pm

    Austin wrote:
    sepheronx wrote:1 rupee decline? What is the nornal price? I heard different stories but my bro in law gets military price or something to that effect. But average person pays what?

    Yeah, I thunk pump prices will stay the same to mitigate any loss from oil drop and Indian gov can use opportune time to increase revenue.

    If you bro-in law is in Armed forces or have relatives there then they might be getting reduced rates.

    Indian Gov runs high budget deficit projected to be 4.1 % this year so low oil price means they might reduce it further , Modi will claim I did it Very Happy

    What do you pay in gas? Or are you a gov employee getting discounts? Lol.
    Hannibal Barca
    Hannibal Barca


    Posts : 1429
    Points : 1439
    Join date : 2013-12-13

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Hannibal Barca Thu Oct 16, 2014 5:38 pm

    sepheronx wrote:I got a question for all you people: have you seen a drop yet in prices at the pump? It was $1.20/L here but now $1.16/L. Barely a drop compared to oil itself.

    I have a feeling they are mitigating the issue of lower oil costs at the pump.
    I also heard a rumor that Saudi Arabia oil companies have huge stakes in various gas pumps around the world and that prices stay up because of them. I was hoping prices would drop.


    Usually orders from the oilfield take 1-3 weeks to reach pump so your price reflects older broker prices like looking the sky you take a pixture of the past.
    A perfect arbitrage scheme and actually many refineries made mountains of money by exploiting this simple fact Wink
    avatar
    Firebird


    Posts : 1333
    Points : 1365
    Join date : 2011-10-14

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Firebird Thu Oct 16, 2014 6:40 pm

    Austin wrote:via STRATFOR

    [url=https://www.addtoany.com/share_save#url=http%3A%2F%2Fwww.stratfor.com%2Fgeopolitical-diary%2Foil-prices-continue-define-geopolitics&title=Oil Prices Continue to Define]Russian Economy General News: #2 - Page 31 Strat-share[/url]  
    Oil Prices Continue to Define Geopolitics

    http://www.stratfor.com/geopolitical-diary/oil-prices-continue-define-geopolitics

    Editor's Note: Oil prices dropped steeply Oct. 14, with crude oil futures falling 4.6 percent to $81.84 per barrel -- the biggest decrease in more than two years. Brent crude dropped by more than $4 a barrel at one stage in the day, dipping below $85 for the first time since 2010. While these are relatively substantial drops, they are just one part of a continuing trend Stratfor has been tracking over the past few months. Factors behind the slump include weak demand, a surfeit of supply and the fact that many large Middle Eastern producers are reluctant to reduce their output.
    In light of today's developments, we are republishing the following diary from Oct. 2, which details the reasons behind the falling prices and how the drops could affect oil-dependent countries around the world.


    The global oil benchmark, Brent crude, fell Thursday to about $92 per barrel before rebounding to finish the day at around $94 per barrel, the lowest price since mid-2012. The latest sell-off follows one of the sharpest declines in a quarter in recent years, in which the price of oil slid about 16 percent. It may be premature to forecast sustained international oil prices lower than $90 per barrel, but if the price of oil remains close to where it is now, many oil exporting countries will feel the pain after basing their budgets on previous price expectations.

    Simply put, the oil market has gotten overstocked. After spending much of the year producing only around 200,000 barrels per day, Libya has seen its production jump up by about 700,000 bpd since mid-June. The United States has continued its relentless expansion of oil production, with the latest Energy Information Agency figures estimating that U.S. production has increased by about 300,000 bpd since the beginning of August, and Iraq has experienced similar gains. Russia, Angola and Nigeria have also seen marked boosts in production. While most of the recent production increases are one-offs, North America could add another 1 million to 1.5 million barrels of production by the end of next year.

    Despite these noteworthy hikes in oil production, sluggish demand by European and Asian (particularly Chinese) consumers has proved just as important to oil prices. While China's demand will continue to grow, demand in developed countries will remain flat, as it has for a while. These factors only add to the concern that if left unchecked, oil prices per barrel in the $90-$100 range may persist for the foreseeable future.

    Lower global oil prices will create challenges for several OPEC producers and others, particularly Russia. While some have suggested that OPEC will lower its production targets, it may not have the ability or the unity to coordinate a large enough drop in production to counter trends elsewhere and bring prices to a level more desirable to it (above $100 per barrel). If oil prices do return to this level in the near future, it likely will have little to do with OPEC's actions.

    The Standoff Between Russia and the West



    The first and most import consequence of lower oil prices is the effect it will have on the ongoing struggle between Russia and the West. Energy commodities dominate the Russian economy, particularly its exports. Any sustained drop in oil prices would directly impact the country's export revenues, and Russia's GDP would take a significant hit. The Kremlin's 2014 budget was based on oil prices averaging $117 per barrel for most of the year, with the exception of prices of $90 per barrel for the fourth quarter. For 2015, however, the budget has been pegged at $100 per barrel after much debate within the Russian leadership. While Moscow has significant financial reserves and can run a budget deficit if need be, Finance Ministry officials have estimated that lower oil prices could shave off 2 percent of Russia's GDP.
    Although Russia has been able to weather the effects of U.S. and EU sanctions thus far for its action in Ukraine, the restrictions have already led some firms, such as Rosneft, to ask for financial assistance from the country's National Wealth Fund. A reduction in oil prices, and in turn lower revenues for Russia's budget, will constrain the Kremlin's ability to support Russian businesses hurt by sanctions the longer they are in place. With less of a financial cushion to soften to consequences of sanctions in the longer term, the Kremlin will have to moderate its position in the ongoing negotiations over the future of Ukraine to meet the demands of Western partners and achieve a reduction in sanctions.

    Competition in the Middle East



    As the West looks to gain from low oil prices in its struggle with Russia, it is also looking for an opportunity to negotiate with a beleaguered Tehran to come to some sort of a resolution on the Iranian nuclear program. For Europe, Iran and its large natural gas reserves represent one of the most promising long-term sustainable alternatives to Russian natural gas. Tehran is facing sanctioned export volumes, lower profit margins and ongoing expenses because of proxy conflicts in Syria and Iraq, and it can ill afford a sustained downturn in global oil prices. Progress on coming to an agreement with the West may be slow, which will only place more pressure on Tehran to negotiate.

    Saudi Arabia is also set on maintaining its global market share and has an opportunity in the short term to rely on its considerable foreign exchange reserves and low production costs to wait out other global producers. Riyadh's oil output is its most strategic resource, and one that the government is quick to use to its advantage. With summer temperatures beginning to cool and regional consumption starting to taper off, Riyadh can free up larger volumes to export, even at lower prices. The Saudis are also looking to leverage their short-term economic stability over rivals such as Russia, especially as they square off with Iran over the future of the Syrian government.

    Saudi Arabia also has the ability to take a considerable number of barrels of oil offline if it wants to. Recently, however, it has offered discounts on its crude oil to secure market share for November, perhaps signaling to other OPEC members that while Riyadh may be willing to take its supply offline, others will have to do the same. But there is no incentive for other countries to reduce their output, since most Gulf producers will still manage to make a profit in the $90-$100 per barrel range; lowering production levels, therefore, would only reduce revenues.

    The Americas and Beyond



    Outside the Middle East, a decline in oil prices will also affect Venezuela. Officially, Caracas sets its budget at the low target of $60 per barrel of oil, a precedent begun by former President Hugo Chavez. Excess revenue could then be funneled elsewhere to off-budget expenditures to satisfy political patrons. Venezuela is in a dire financial position, needing oil prices perhaps as high as $110 to meet expenditures both on and off the book. Sustained low oil prices would severely hamper Caracas' ability to finance its imports, perhaps forcing government officials to get serious on selling foreign assets, such as Citgo, and gold from its central bank reserves, or offering even more attractive terms on loans for oil deals with the Chinese, though Beijing has recently balked at this. If oil prices stay low for an extended period, Caracas could also be forced to reconsider its deals with Cuba or programs like Petrocaribe.
    Meanwhile, for developed massive oil importers -- Japan, China, India and the European Union -- low oil prices will give some respite to significant import bills. On the other hand, prices could also increase short-term strain in Europe, where energy has been the main factor pushing monthly inflation lower. While lower energy costs are good for Europe in the long run, they also raise the threat of deflation and inflame tension between the European Central Bank and Germany.

    Even though prices have likely bottomed out, the recent plunge in the price of oil serves as a reminder of how geopolitically significant energy prices can be. Energy supplies form the backbone of modern industrial economies, and energy resources are critical export commodities for those who possess a lot of them. As long as fossil fuels remain the dominant source of energy -- something that is likely to last at least another few decades -- oil supply and oil prices will remain critical.


    Read more: Oil Prices Continue to Define Geopolitics | Stratfor
    Follow us: @stratfor on Twitter | Stratfor on Facebook

    A perculiar aspect of all this is that if oil went below 87 or certainly 80 usd per barrel, fracking becomes more and more unviable, especially in the key 7 or so regions around the USA.

    Additionally, the Rouble is becoming weaker vs the USD. This *could* mean inflation. However, sometimes a depreciation is beneficial to an economy. It can mean that while Russia is getting less USD per barrel, it *might* actually benefit more in overall terms. (Sadly its a complex area, but anyway..!)

    Meanwhile, the RMB is starting to develop as more of an international currency. And America is antagonising the EU with its sanction demanding arrogance vs Russian trade.

    PS Brent crude is very easy to manipulate, and can't be considered a valid barometer of prices on its own. Infact London and elsewhere have managed to corrupt foreign exchange and bond markets, so would have no problem rigging Brent crude, which is a price derived from a tiny number of suppliers.

    With Eurasian Union develpts happening, and the Ukraine leading to ever more jawdropping levels of idiocy, I wonder where things will go...?

    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 8:00 pm

    Hannibal Barca wrote:
    sepheronx wrote:I got a question for all you people: have you seen a drop yet in prices at the pump? It was $1.20/L here but now $1.16/L. Barely a drop compared to oil itself.

    I have a feeling they are mitigating the issue of lower oil costs at the pump.
    I also heard a rumor that Saudi Arabia oil companies have huge stakes in various gas pumps around the world and that prices stay up because of them. I was hoping prices would drop.


    Usually orders from the oilfield take 1-3 weeks to reach pump so your price reflects older broker prices like looking the sky you take a pixture of the past.
    A perfect arbitrage scheme and actually many refineries made mountains of money by exploiting this simple fact Wink  

    And yet, Ontario already saw a 15 cent decrease per L and we are paying roughly the same. So why they end up with decrease already?
    Hannibal Barca
    Hannibal Barca


    Posts : 1429
    Points : 1439
    Join date : 2013-12-13

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Hannibal Barca Thu Oct 16, 2014 8:18 pm

    Different places different traders. Some get the stuff faster than others or have more demand and more supplies.
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 8:27 pm

    sepheronx wrote:

    What do you pay in gas? Or are you a gov employee getting discounts? Lol.

    By gas if you mean Petrol because in India no one calls it gas except for CNG vehical that uses Gas.

    Different cities have different rates depending on the central and state tax and there are different kind of petrol normal and high octane.

    I dont remember exactly how much a liter of petrol will cost today in my city Mumbai as I dont own any vehical but I can find it out for you by tommorow.
    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 8:29 pm

    Thanks Austin. Yeah, i would imagine driving in Mumbai is terrible and its faster to walk or take transit.
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 8:32 pm

    sepheronx wrote:Thanks Austin. Yeah, i would imagine driving in Mumbai is terrible and its faster to walk or take transit.

    You bet and now we have Metro so its much more better , I generally take metro while going to office and walk back home ...... it nothing else it burns a bit of calorie Wink
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 8:36 pm

    Looks like Saudi is hell bent on dropping the Oil Price to $70 from the news report

    http://www.vedomosti.ru/finance/news/34833321/strany-persidskogo-zaliva-ne-namereny-sokraschat-dobychu-na
    avatar
    Austin


    Posts : 7618
    Points : 8015
    Join date : 2010-05-08
    Location : India

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Austin Thu Oct 16, 2014 8:38 pm

    Ministry of Economic Development acknowledged the likelihood of a recession in 2015

    Читайте далее: http://www.vedomosti.ru/politics/news/34823091/minekonomrazvitiya-priznalo-veroyatnost-recessii-v-2015-g#ixzz3GKng04lR

    Ministry of Economic Development is considering various scenarios of economic development for 2015-2017., Including stress option proposed by the Central Bank. When you save the current market prices the economy in 2015 could decline, said Deputy Minister of Economic Development Alexei Vedev . "We are, of course, in this research, and $ 60 per barrel, we have lived and even when some of them dreamed of. Economy is much more adapted than it seems, is actually much more stable, "- he said, answering the question, considering whether the Ministry of Economic Development of the Central Bank stress scenario with oil prices fall to $ 60 a barrel.


    Commenting on the issue, whether the economy will decline in 2015 at current oil prices, Vedev said: "There is such an option."


    According to the forecast released by the Ministry of   "Option A" average oil price of Urals in 2015 is expected to reach $ 91 per barrel, and in 2016-2017. it is assumed to stabilize at $ 90 per barrel.


    At that price, Ministry of Economic Development of Russia's GDP forecast a decline in 2015 by 0.6% and the recovery of growth at the level of 1,7-2,8% in 2016-2017.
    Today, the Russian Energy Minister Alexander Novak explained why not see the tragedy in lower oil prices. "Earlier this year, the price reached $ 120 per barrel despite the fact that in the last three years has been an average of $ 100. If we had $ 120, and now $ 83-85, average weather will be about $ 100. Maybe it is not necessary to make a tragedy that the price dropped slightly and now all afraid.


    Price fluctuations, sine - this is normal. You need to watch the price of the average for the year and then to predict the trends for the coming years - 2015-2016 "- said Novak.


    Recently, the rating agency S & P forecasted reduction in Russia's economy in the second half of the year, for 2014 growth will be about 0.3%. The reason - the two types of sanctions, says S & P: Russia to limit access to foreign financial markets and restrictions on food imports by Russia, which led to a food supply shock caused the acceleration of inflation. In the periodic review of the Center for Development of HSE "Comments about the state and business," 20 September - 3 October said that in the short term risk of transition of the Russian economy from stagnation to a full recession in September "Got a little more." Forecast made at the price of Russian oil at $ 92 per barrel.

    Читайте далее: http://www.vedomosti.ru/politics/news/34823091/minekonomrazvitiya-priznalo-veroyatnost-recessii-v-2015-g#ixzz3GKnoGNY6


    sepheronx
    sepheronx


    Posts : 7437
    Points : 7703
    Join date : 2009-08-06
    Age : 33
    Location : Canada

    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  sepheronx Thu Oct 16, 2014 8:49 pm

    Well, I wouldnt be surprised really. Seems Europe is facing a recession and they are Russias major trading partner. Depends on how mich the recession is. As long as it isnt the 2008 shock (-9%) then its doable, just need to change the economic model.
    I agree with what you previously said Austin about changing the budget to reflect low oil prices. This in turn will force the gov to look at other economic options. With import substitution industry now creating an industrial boom in Russia, added the low currency value, it will now be even cheaper to do business in Russia and these new industries or old ones, will be able to pull in more.

    Chinese investors in Russia are probablh salivating, as it means even cheaper production for them.

    Sponsored content


    Russian Economy General News: #2 - Page 31 Empty Re: Russian Economy General News: #2

    Post  Sponsored content


      Current date/time is Fri Jul 01, 2022 12:47 am