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Russia Considers Possibility Of $25 Oil Next Year
Russia Considers Possibility Of $25 Oil Next Year
Russia is considering the notion that oil prices may be as low as $25 per barrel in 2020, the country’s central bank said in its new forecast published on Monday, as cited by Reuters.
Russia’s Central Bank has forecast in its macroeconomic forecast that oil could possibly hit that low due to falling demand for oil and oil products worldwide, as well as from disappointed global economic growth.
The doom and gloom scenario was just one proposed by the bank. If that risk scenario actually materializes, Russia’s inflation could increase to 7% or 8% next year, on the back of falling gross domestic product to 1.5%– 2%.
Russia is perhaps uniquely positioned to withstand low oil prices, although $25 per barrel is pretty bleak.
One of the reasons why Russia is more impervious to low oil prices compared to its competition is that its currency weakens when oil prices fall. This provides some type of a cushion—at least to some extent—for its lower oil revenues. Russian oil companies can pay their expenses in this weaker ruble, but still rakes in US dollars for its oil exports. Further allowing it to withstand lower prices, are that Russia’s oil company’s taxes are designed to be less as oil prices fall.
So much so is Russia’s ability to adapt to lower oil prices, that it actually struggles with higher oil prices, which dent demand for its oil. Russia’s budget for 2019 was based on $40 oil.Meanwhile, Saudi Arabia needs $80—some say even $85—per barrel.
In August, Russia said its 2019 budget breakeven was at a Urals price of $49.20—the lowest breakeven in more than a decade. This has Russia and Saudi Arabia—colleagues in the current production quotas designed to rebalance the market—at odds, and likely working toward perhaps different goals.
Russia Backs Away From Dollar AGAIN: Shifts $100 Billion To Yuan, Yen, And Euro
Russia Backs Away From Dollar AGAIN: Shifts $100 Billion To Yuan, Yen, And Euro
Russia is continuing to ramp up its efforts to move away from the American dollar. The country just shifted $100 billion of its reserves to the yuan, the yen, and the euro in their ongoing effort to ditch the dollar.
The Central Bank of Russia has moved further away from its reliance on the United States dollar and has axed its share in the country’s foreign reserves to a historic low, transferring about $100 billion into euro, Japanese yen, and Chinese yuan according to a report by RT. The share of the U.S. dollar in Russia’s international reserves portfolio has dramatically decreased in just three months between March and June 2018. The holding decreased from 43.7 percent to a new low of 21.9 percent, according to the Central Bank’s latest quarterly report, which is issued with a six-month lag.
The money pulled from the dollar reserves was redistributed to increase the share of the euro to 32 percent and the share of Chinese yuan to 14.7 percent. Another 14.7 percent of the portfolio was invested in other currencies, including the British pound (6.3 percent), Japanese yen (4.5 percent), as well as Canadian (2.3 percent) and Australian (1 percent) dollars.
The Central Bank’s total assets in foreign currencies and gold increased by $40.4 billion from July 2017 to June 2018, reaching $458.1 billion. –RT
Russian and others have been consistently moving away from the dollar and toward other currencies. Economic sanctions, which are losing their power as more countries move from the dollar, and trade wars seem to be fueling the dollar’s uncertainty.
Russia began its unprecedented dumping of U.S. Treasury bonds in April and May of last year.
…click on the above link to read the rest of the article…
The Central Bank of Russia Added a Record 223 Tons of Gold in 2017
Russian Central Bank Adds 300,000 ounces (9.331 tons) of gold to reserves in December.
Since June 2015, the Central Bank of Russia has added over 558 tons of gold to reserves.
December’s 9.331 ton gold addition brings Russia’s Central Bank holdings to 1838.211 tons; the sixth most of any nation, close behind the People’s Bank of China.
Overall Russian reserves rose from $431.636 in November to $432.742 in December.
Russian holdings of U.S. Treasuries top $100 billion for eighth month in a row.
Gold reserves worth $76.647 billion constitute 17.7% of overall Russian reserves.
Watch the video companion to this report:
Russia Warns Washington: Confiscating Gold Reserves Would Be “Declaration Of Financial War”
Russia Warns Washington: Confiscating Gold Reserves Would Be “Declaration Of Financial War”
In a surprising, and unexpected warning – which seemingly came out of nowhere – Russia’s Finance Minister Anton Siluanov cautioned Washington yesterday that “If our gold and currency reserves can be arrested, even if such a thought exists, it would be financial terrorism.”
The comment appears to have been prompted by consideration of escalating US/EU sanctions which could ultimately impact Russia’s offshore held gold and reserves. If sanctions include the freezing of foreign accounts of the central bank, it would be equal to declaring financial war on Russia, Siluanov said, although he added that he considers such a scenario unlikely (for now).
After making the point that Russia’s budget is prepared for the possibility of tougher US/EU sanctions, RT reports that Siluanov warned if the west include the seizure of Russia’s foreign exchange reserves, it would be regarded as a “declaration of a financial war.”
According to Siluanov, the budget takes into account the risk of income shortfalls. The budget is based on oil prices at $40 per barrel, which is almost a third lower than the current price.
The budget “has a margin of safety in case of restrictions and sanctions.” It also includes losses incurred by a probable ban on investment in Russian government bonds for foreign funds. The US Treasury is currently considering such penalties.
“If we did not have a margin of safety, then it would be easy to weaken us. And then, our so-called friends would say – if you want to get help from the International Monetary Fund, you must do this and that,” said Siluanov.
…click on the above link to read the rest of the article…
De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities
De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities
Back in 2013, The NSA was first exposed for secretly ‘monitoring’ the SWIFT payments flows. This appears to have been among the last straws for Russia (and others) as far as both NSA spying and dollar domination.
Last year, following threats to remove Russia from SWIFT by the UK, (which SWIFT rapidly distanced its ‘independent-self’ from), Russia (and China) announced plans to create its own de-dollarized version. In November, Russia detailed the SWIFT-alternative’s launch date around May 2015, and just last month, Medvedev warned of “unlimited reaction” if Russia was cut off from the SWIFT payments system.
So the news this week that Russia has launched its own ‘SWIFT’-alternative, linking 91 credit institutions initially, suggests de-dollarization is considerably further along than many expected (especially as Russia dumps US Treasuries at a record pace).
Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia.
It should be noted that Russia’s Central Bank initiated the development of the country’s own messaging system in response to repeated threats voiced by Moscow’s Western partners to disconnect Russia from SWIFT.
…click on the above link to read the rest of the article…
A Full-Blown Economic Crisis Has Erupted In Russia
A Full-Blown Economic Crisis Has Erupted In Russia.
The 8th largest economy on the entire planet is in a state of turmoil right now. The shocking collapse of the price of oil has hit a lot of countries really hard, but very few nations are as dependent on energy production as Russia is. Sales of oil and natural gas account for approximately two-thirds of all Russian exports and approximately 50 percent of all government revenue. So it should be no surprise that the fact that the price of oil has declined by almost 50 percent since June is absolutely catastrophic for the Russian economy. And when you throw in international sanctions, wild money printing by the Central Bank of Russia and unprecedented capital flight, you get the ingredients for an almost perfect storm. But those of us living in the western world should not be too smug about what is happening in Russia, because the nightmare that is unfolding over there is just a preview of the economic chaos that will soon envelop the whole world.
So far this year, the Russian ruble has fallen nearly 50 percent against the U.S. dollar. That is a monumental shift. And as the collapse of the ruble has accelerated in recent days, we are seeing scenes in Russia that are reminiscent of the Weimar Republic. For example, just consider the following excerpt from an article that just appeared in the New York Times…
