Russian Economy General News: #11

par far wrote:The US is really desperate to get the oil prices up.

Hannibal Barca wrote:No offers. This is the moment in history that China moves to the top spot and there is a battle for no2. There is no time for negotiation.

Russia should sit back and listen to offers, politely.

Really?

Between who?

Money Is Flooding Into Russia Despite Crashing Oil Prices

With the virtual OPEC+ meeting where Russia and Saudi Arabia were to discuss output cuts to end the oil price war delayed Monday, oil prices took a huge beating--but Russian stocks are still hanging on.   While state-backed companies saw their share prices shredded on March 9th, including major banks Sberbank and VTB as well as energy giants Rosneft and Gazprom, shedding billions, the market is still being relatively kind to them, all things considered.

On March 6th, Sberbank was trading on the LSE at $12.94 per share. By close on Monday, it was trading at $9.94. That’s not exactly the crash that many expected.

And when it comes to the top three Russian oil companies, Rosneft, Gazprom, and Lukoil, we’re not seeing a major share disaster at all.

Since the second week of March, Rosneft has regained most of what it had lost:

And Gazprom is largely unscathed, if not reveling in the crisis:

On March 19th, the Moscow Exchange (MOEX) hit a one-year low as global investors fled assets made risky by the oil price war and COVID-19 fears.

Yet, according to Reuters, things have changed since then; retail investors are now flooding into the Moscow market, with Gazprom winning the popularity contest. Gazprom shares were included in 23.6% of portfolios.

And today, despite the postponement of the virtual OPEC+ meeting featuring Russia and Saudi Arabia, Russia’s stock markets still managed to book early gains.

This is not the ideal situation for forcing Russia back to the oil debate table.

In fact, the only potential silver lining right now is that Russia’s oil production already dropped in the first week in April simply because it makes no sense for its oil companies to produce more when the market is already so oversupplied and storage space severely curtailed.

Reuters reported on Monday that Russian oil production is down about 0.35% so far in April, compared to its average output in March.

Tariffs Won’t Make Russia Back Down This is partly a diplomatic war at this point. That means it’s about saving face for all involved. The Saudis have already saved face by making it clear that this is a Russian attack on U.S. shale. But the Saudi attack on Putin is what got the virtual meeting canceled in the first place.

Throughout this game, it has been imperative for the Saudis that the United States put the blame for the oil price war squarely on Russia, noting that the Saudis have no desire to decimate the U.S. shale patch and pointing to the Kingdom’s major investments in the U.S. oil sector.

But it’s also an existential war: With the coronavirus crushing global demand, and with Russian producers already starting to produce less simply because nothing else makes sense, an OPEC++ deal may mean nothing at all.

Indeed, James Henderson of the Oxford Institute for Energy Studies told the Energy Voice: “There is a genuine reluctance in Russia to cut production. The feeling is that, at this point, such a move would be meaningless given uncertainty over demand.”

Regardless, Russia has less to lose, and the U.S. shale patch was the key beneficiary of OPEC+ cuts that preceded the latest combination of crises.

Why does Russia have less to lose? Its oil companies are profitable at $30 oil. Their currency is free-floating. The Russian budget is stable for years out, with a strategy that has seen Moscow boost foreign currency reserves nicely. The ruble is holding steady, despite a bit of temporary panic in March.

So, where does this leave Russia’s biggest stocks?

Sitting rather prettily.

When Russian markets opened on April 6th, everything was green. The RTS Index opened 2.2% higher, and the MOEX opened 0.9% higher.

But Russia isn’t entirely in the clear, even if it’s all worth it.

Despite its ability to theoretically survive at $30 oil, indefinitely if you hear Russia tell it, it still will have a hard time finding buyers for its crude oil with Saudi Arabia flooding the market. And sooner or later, storage will max.  

Additionally, the market is already pricing in production cuts that haven’t been agreed upon, and if those fail to happen, Russia’s biggest stocks--including the oil giants--will take a hit along with everyone else.

The bottom line: The Russian markets are trading on the economic hit the U.S. will take over the coronavirus. And that’s where everyone’s hedging their bets. Russia has far more to gain by not negotiating at this point. Its gain is in America’s loss, and whatever hit it takes in the meantime is worth it. The markets would seem to agree.

PapaDragon wrote:
Nabulina is one who kept the half-literate commie wannabes from flushing entire Russian cash reserves down the toilet to prop up the ruble back in 2014 she was one who introduced floating currency this enabling Russia to stay afloat and continue with geopolitical moves and one that made sure they keep storing cash and gold for rainy days (these days now)

So you may want to ease up there

magnumcromagnon wrote:

miketheterrible wrote:Something key happened - Russian government bought all of Russian federal bank stocks/assets of Sberbank for $20B.  Now Russian government will have full access to all its foreign reserves and have total control of a bank that will fund its national projects.

The next thing they should do is set in motion to nationalize their central bank, fire their petty monetarist Evilviral Nabyourmoneylina, set lending rates to between 1-2% for accredited businesses (nothing related to buying derivatives, foreign personal property, etc.), and possibly small borrowers (small businesses and individuals) could get a nominal 0.5-1% rate? Hopefully they get this done before VVP retires.

i didn't said.. 30 millions fast food Mcdonals retail jobs.. read again..

i told 30 millions small business -med business jobs.. people that wins as much money as they want...
business that will allow Russians to become their own bosses in their own business.. thousands $$ a month,
or millions $$ . Jack MA started his business as a small business ... and he don't win the minimum wage..

If You ever see the conference of Jack MA ,he explained it all.
Centralized Government kills creativity and innovation.

Apple began as a small business one time.. they manually designed microcomputers in a garage.. until they got attention of a major investor and history is already know..

Putin strategy of relying
on energy is outdated..and to depend on tourism and olympics is even more retarded.. This goes back to
the first argument.. i had.. is all about Leadership.

Russia economy can only sky rocket ,when government
stay out of the way of the direction of the nation economy.. and allow people to build their own business.. government role should be to help with financing if the government see major potential and provide expertise if they need help , into the area they are interested. But also Government is not even need.. the same society
can backup society projects.. For example something what is happening in this place..

Russian government role is to promote this kind
of business, create a safe online payment system.. so that people can trade money ,and government help to verify that there are no scammers or that each small business honor their offers.. that way the society ,will