Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
Obama needs to pressure the Sauds to start cranking out more oil and drive the price down. Flood the market. This will put a huge economic bite on Putin, who depends on oil revenues to pay for his aggression in the Ukraine.
While Opec wrestles with its internal politics, the US president is mulling a gambit of his own. Barack Obama is now considering whether to lift the restriction on crude exports imposed in the 1970s, a move that could put further pressure on Opec producers by lowering prices but also turn the screws on Russia, which is in Washington’s bad books over Ukraine. One of the many conspiracy theories currently doing the rounds over the oil price suggests the US and Saudi Arabia are acting in concert in a bid to hurt Iran and Russia.
Russia is at risk itself in this low-price environment, because half of the state’s revenues come from oil and gas. The Moscow stock market has dropped by more than 20% since the summer and the rouble has fallen by a similar amount this year against the dollar. Russia’s central bank is said to be working on a shock scenario of oil prices hitting $60.
Russia, Ecuador and Algeria all risk sliding into economic recession if oil prices continue to drop; Russia’s newfound geopolitical assertiveness could be reversed.
Goldman Sachs is projecting prices will go even lower. The U.S. investment bank slashed its 2015 oil price forecast on Sunday, saying that Brent could fall as low as $80 a barrel and WTI as low as $70 a barrel early next year.
Falling oil prices will have a less dramatic impact on the Russian economy in the near term. The country has around $450 billion in reserves to hedge some of the effects of cheaper crude, and that cash could last for up to a year. “They’re not in as much trouble” as countries with weaker economies, Lynch said.
Still, Russia could slide into a recession all the same. Moscow gets more than half its budget revenue from oil and gas; for every $10 drop in the per-barrel price of oil, Russia loses up to $14.6 billion a year in revenues, according to Alfa Bank.
On top of that, its currency is weakening. The Russian ruble has slipped by more than one-quarter against the dollar since the start of the year because of falling oil prices and Western sanctions against Moscow over the conflict in Ukraine. Russia has so far spent $6 billion to prop up the currency, but to little effect.
Some analysts predict Russia’s economy will grow by just 0.5 to 2 percent next year, compared with about 4 percent a year in the 2010-2012 period, the Economist noted.
A few weeks ago, I said:
Obama needs to pressure the Sauds to start cranking out more oil and drive the price down. Flood the market. This will put a huge economic bite on Putin, who depends on oil revenues to pay for his aggression in the Ukraine.
Now the price of oil has been plunging. It is down 25% since June.
And it is working exactly as I said it would:
While Opec wrestles with its internal politics, the US president is mulling a gambit of his own. Barack Obama is now considering whether to lift the restriction on crude exports imposed in the 1970s, a move that could put further pressure on Opec producers by lowering prices but also turn the screws on Russia, which is in Washington’s bad books over Ukraine. One of the many conspiracy theories currently doing the rounds over the oil price suggests the US and Saudi Arabia are acting in concert in a bid to hurt Iran and Russia.
Russia is at risk itself in this low-price environment, because half of the state’s revenues come from oil and gas. The Moscow stock market has dropped by more than 20% since the summer and the rouble has fallen by a similar amount this year against the dollar. Russia’s central bank is said to be working on a shock scenario of oil prices hitting $60.
Thank you. Thank you very muuuuuch.
Interesting post, but could you tighten it up a bit? Did Obama lift the restrictions on crude imports? Also, are you quoting yourself or your post? Thanks.
There is no larger prize than the control of the energy markets, doofus.Russia doesn't care. It is looking toward larger prizes.
You mean to tell me that falling crude prices are bad for Russia (and Venezuela, et. al) .? Really? Wow!! Such penetrating and deep insight!!
G5000 should have his name changed to "Captain Obvious". .....
Oh please. Putin is looking toward empire where control of energy prices will follow.There is no larger prize than the control of the energy markets, doofus.Russia doesn't care. It is looking toward larger prizes.
The Colder War a book by Marin Katusa
You mean to tell me that falling crude prices are bad for Russia (and Venezuela, et. al) .? Really? Wow!! Such penetrating and deep insight!!
G5000 should have his name changed to "Captain Obvious". .....
You literally have it ass backwards.Oh please. Putin is looking toward empire where control of energy prices will follow.There is no larger prize than the control of the energy markets, doofus.Russia doesn't care. It is looking toward larger prizes.
The Colder War a book by Marin Katusa
If oil prices drop to $60, there is a risk of some domestic shale oil producers going bust.The USA is also one of the largest producers of crude oil and natural gas in the world. If prices drop much below 80.00 a barrel, the shale oil in the Bakken's play becomes unprofitable.
But now according to Faux News, it's all part of the presidents' new plan to destroy America with lower crude oil prices.........
You mean to tell me that falling crude prices are bad for Russia (and Venezuela, et. al) .? Really? Wow!! Such penetrating and deep insight!!
G5000 should have his name changed to "Captain Obvious". .....
A very poor attempt to cover up your impotence.
None of you tards had the balls to lay out a plan about what to do about ISIS or Russia or Iran or any other foreign policy challenge we are facing, despite being goaded by me many, many times to do so. You are too cowardly.
And let this be a lesson to you that there are ways to hurt our adversaries that don't always involve blowing shit up.
You mean to tell me that falling crude prices are bad for Russia (and Venezuela, et. al) .? Really? Wow!! Such penetrating and deep insight!!
G5000 should have his name changed to "Captain Obvious". .....
The USA is also one of the largest producers of crude oil and natural gas in the world. If prices drop much below 80.00 a barrel, the shale oil in the Bakken's play becomes unprofitable.
But now according to Faux News, it's all part of the presidents' new plan to destroy America with lower crude oil prices.........
You mean to tell me that falling crude prices are bad for Russia (and Venezuela, et. al) .? Really? Wow!! Such penetrating and deep insight!!
G5000 should have his name changed to "Captain Obvious". .....
The USA is also one of the largest producers of crude oil and natural gas in the world. If prices drop much below 80.00 a barrel, the shale oil in the Bakken's play becomes unprofitable.
But now according to Faux News, it's all part of the presidents' new plan to destroy America with lower crude oil prices.........
got a link for that lie? Or just shitting out of your mouth again?
You mean to tell me that falling crude prices are bad for Russia (and Venezuela, et. al) .? Really? Wow!! Such penetrating and deep insight!!
G5000 should have his name changed to "Captain Obvious". .....
The USA is also one of the largest producers of crude oil and natural gas in the world. If prices drop much below 80.00 a barrel, the shale oil in the Bakken's play becomes unprofitable.
But now according to Faux News, it's all part of the presidents' new plan to destroy America with lower crude oil prices.........
got a link for that lie? Or just shitting out of your mouth again?
Sure thing asshat.
America world rsquo s leading oil producer As we rsquo re pumping more we rsquo re using less.
If The Oil Plunge Continues Now May Be A Time To Panic For US Shale Companies Zero Hedge
Turn off Fox
Bad News for America
