NATO media is quick to launch a propaganda blitz directed at Russia, greatly exaggerating the sharp fall of the ruble in connection to the massive drop in oil prices.
Russia Sees Oil & Gas Income Fall By Almost $40 Billion
Russia’s revenues from oil and gas will be US$39.5 billion (3 trillion rubles) lower than planned, due to the tumbling oil prices, Russian Finance Minister Anton Siluanov said on Wednesday, adding that Russia’s budget will be in deficit this year.
The coronavirus pandemic and the lower economic activity, coupled with oil prices half the level before Russia and Saudi Arabia broke up the OPEC+ production cut deal two weeks ago, will weigh on Russia’s budget this year, which will tip into deficit.
Russia’s economy is not going as well as one would have hoped, the finance minister admitted today, saying that the oil price factor alone is set to reduce the country’s budget income by nearly US$39.5 billion compared to earlier estimates.
In case of budget deficit, Russia will use reserves from the National Wealth Fund (NWF), Siluanov said on Wednesday.
According to analysts at Gazprombank, cited by Reuters, the fund has enough reserves to compensate for lower budget revenues due to low oil prices for more than five years.
Last week, a day after oil prices collapsed in the worst drop in nearly three decades—courtesy of the renewed Saudi-Russia rivalry on the oil market – Russia’s Finance Ministry said that Moscow had enough resources to cover budget shortfalls amid oil prices at $25-30 a barrel for six to ten years.
The price of the Russian export grade Urals dropped far below $42.40 a barrel as oil prices tumbled by 30 percent after Saudi Arabia launched an all-out price war with Russia following the collapse of the OPEC+ group.
The $42.40 Urals price is the price at which Russia’s budget is balanced, the Russian Finance Ministry said last week, noting that the country’s NWF had as of March 1 liquid assets worth US$150.1 billion, or 9.2 percent of Russia’s gross domestic product (GDP).
Lower oil prices are likely to persist for some time, considering the huge demand destruction in the coronavirus outbreak and the coming flood of extra supply on the already oversupplied market as both Russia and Saudi Arabia pledge to boost supply in the new feud between the former allies.
These retards don't understand that ruble forex drops offset
oil price drops. Of course, the more ignorant these chauvinists are the better. Like
Obummer and his "we'll put Russian on its knees with sanctions" delusions.
BTW, don't take the pronouncements about how many years Russia can "last" on $25 oil seriously. There is no intrinsic dependence of the Russian
GDP on oil and gas exports. So the Russian GDP will restructure itself as the under 7% of the GDP that depends on oil and gas extraction shrinks.
1) Loss of revenues from oil and gas exports are a stimulus for Russia to focus on other economic activity. Unlike Saudi Arabia, Russia consumes
around 50% of the oil and gas it produces:
So the industry will not collapse even if export revenues drop by $40 billion and higher. Anyone who thinks that Russia cannot adjust 3.5% of
its GDP in the next 10 years is grossly ignorant or does not care.
2) Reduction in government revenue from oil and gas will force it to crack down on tax cheats. It is time to slap these monkey down since
2003 is long over.
3) Cheaper oil and gas prices stimulate the Russian economy while higher prices anti-stimulate it. Russia is not Saudi Arabia or Venezuela.
NATzO morons don't understand this.
4) Dealing with large swings in oil prices forces the Russian government and the economy in general not to use this cash flow like crack.
Oil and gas are not the main problem for Russia from the corona virus pandemic. It is the global economic decline. This decline affects the
USA and the rest of NATzO as well.