The Russian bear is a decidedly different animal. Even as the oil price outlook has become clearly bearish, Russia knows little fear. It’s defying the oil price hibernation with bullish economic outlook, the best-performing equities market, and even the best-performing currency against the U.S. dollar. And there’s something the average investor might not know: A strong performance by Russia’s equities market almost always precedes a crude oil price rally.
When you add to this the Russia and OPEC commitment to a new round of crude oil output cuts, the much-needed supply squeeze necessary to lift oil prices might not be far off. So why does a Russian bear potentially signal a victory for oil bulls? Because Russia is the single outlier among oil economies right now. By all logic, it should be reeling with the effects of low oil prices, but it’s not.
Russia’s economy expanded 2.2% during the third quarter, with GDP growing 1.7% up from 0.9% in the previous quarter. An Al Jazeera report credits President Vladimir Putin’s Strategic Spending Program that was launched in 2018. That’s quite impressive considering that global manufacturing activity fell for the sixth consecutive month in October, marking the sharpest downturn in 17 years. Being so dependent on oil sales, Russia has every incentive in the world to want to keep oil prices buoyant. Indeed, as Kirill Dmitriev, CEO of Russia’s sovereign wealth fund RDIF, recently told CNBC: