Category: Russia

(Bloomberg) — The rally that’s made the ruble the best-performing major currency in the past month is coming to an end as oil slides to a six-week low. The ruble is about 10 percent overvalued after gaining 2.5 percent since Feb. 17, even as crude dropped 16 percent, according to TKB BNP Paribas Investment Partners. There’s a 61 percent chance of the Russian currency weakening by such an amount by June 30, options data compiled by Bloomberg show. With a fragile cease-fire holding in Ukraine, investor attention is back on the drop in oil, after crude’s gains underpinned a recovery in Russian assets this year. The ruble’s advance after a 46 percent tumble in 2014 has allowed policy makers to reduce interest rates twice and is stoking forecasts for more easing as it drives flows into the country’s bonds. “The ruble is overvalued considering the oil price,” Konstantin Nemnov, […]

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Exxon Mobil Corp. Chief Executive Officer Rex Tillerson said, North American shale “is more resilient than some people think it is.” Photographer: Andrey Rudakov/Bloomberg (Bloomberg) — Exxon Mobil Corp. leader Rex Tillerson is visiting Moscow this week for meetings with Russian oil producer OAO Rosneft and government officials amid talk of further sanctions, according to people familiar with the matter. The chief executive officer, who increased Exxon’s drilling rights in Russia fivefold last year, has preliminary plans to meet with officials on Wednesday, said two of the people who asked not to be identified because details of the visit are confidential. Exxon declined to comment, saying the travel plans of its executives aren’t public. The trip comes even as the U.S. and Europe consider further sanctions on Russian companies and individuals over the annexation of Crimea one year ago. Exxon snapped up millions of acres in Russia last year, […]

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(Bloomberg) — Russia plans to maintain oil output at current levels for the next two decades, Energy Minister Alexander Novak said, shrugging off sanctions and the slump in crude prices. Production will remain at about 525 million metric tons a year, or 10.5 million barrels a day, until 2035, Novak said Wednesday at a conference in Moscow. Russia, which ranks with Saudi Arabia and the U.S. among the world’s biggest producers, pumped 10.71 million barrels a day in January, a post-Soviet record. Crude oil dropped 48 percent last year because of global oversupply, prompting speculation that producers would curb output as fields became unprofitable. U.S. shale oil output will expand at the slowest pace in more than four years in April, according to a U.S. government report Monday. “We aren’t making any assumptions about reducing output currently,” Novak said. “Our task and plan, as you know, is to maintain […]

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(Bloomberg) — OAO Lukoil fell to a five-week low, leading a drop in U.S.-traded Russian energy stocks as oil prices declined and separatists in Ukraine traded blame with the government over cease-fire violations. Lukoil, the country’s second-largest oil producer, slid 3.7 percent to $43.60 as of 12:51 p.m. in New York after dropping 3.7 percent in London. A Bloomberg gauge of the U.S.-traded Russian stocks fell 2.2 percent, reducing this year’s gain to 14 percent. Stocks retreated as oil dropped for a fifth day, the longest streak of losses since mid-December, amid signs a global supply glut will persist. The Bloomberg Russia-US Equity Index had advanced 25 percent this year through March 5 as Brent crude stabilized at around $60 a barrel. It touched $56.81 today. A military spokesman said insurgents broke the terms of a peace accord in eastern Ukraine, while the rebels accused the government of firing […]

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(Bloomberg) — Russian car sales fell 38 percent last month, more than estimated, as the economy contracts and inflation accelerates after last year’s ruble collapse. Sales of new cars and light commercial vehicles dropped to 128,298 units in February from 206,526 a year earlier, the Association of European Businesses in Russia said Tuesday in a statement. That’s the biggest decline since 2009 and follows a 24 percent slump in January. The median estimate of seven economists surveyed by Bloomberg was a decrease of 28 percent. Automakers in Russia are suffering after the ruble weakened 46 percent against the dollar last year, the world’s second-worst performance, and the economy slid to the brink of recession. Car manufacturers are offering discounts or slowing output to counter low demand, with consumers hurting from inflation at 16.7 percent in February, the fastest pace since 2002. The car market probably won’t rebound until 2019 […]

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“Development of new offshore potential, an LNG terminal, and ensuring interconnected pipelines between countries and into Hungary and Serbia will create real diversity and competition,” Hochstein said. “That is the cornerstone of security. The U.S. will continue to work with all countries in the region to make this goal a reality.” To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at [email protected] To contact the editors responsible for this story: James M. Gomez at [email protected] Peter Laca

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MOSCOW (Reuters) – Russian crude oil exports are expected to rise this year and beyond as volumes are diverted away from domestic refineries which are cutting capacity as part of a modernization drive, Russian Energy Minister Alexander Novak said. Novak told Reuters that Russia, one of the world’s biggest oil producers, will maintain its crude oil output at over 10 million barrels per day (bpd), despite some expectations of a plunge in production due to lower prices. He said Russia will continue consultations with the Organization of the Petroleum Exporting Countries (OPEC). Russia will meet OPEC officials in June in Vienna to discuss the impact of shale oil production on global oil markets. Up to now, Russia has been cutting crude oil exports and instead sending much of its crude production to domestic refineries, a move that offers better margins than selling crude to the market at current low […]

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The Kremlin’s motivation in the Ukrainian conflict has split scholars. Is Russia a greedy state ideologically driven to expand or a declining insecure superpower defending itself against NATO? Realist scholars (for example, see these recent pieces by  John Mearsheimer and Stephen Walt ) argue that the current Russian-Ukrainian conflict was provoked by NATO expansion into Georgia and Ukraine, which were a part of Russia’s strategic zones of influence. The opponents tend to blame Russia for the conflict. To a large extent the divide is methodological: following the publication of Mearsheimer’s piece, Foreign Affairs surveyed scholars on “who is to blame for the conflict?” and discovered that scholars of international relations predominantly mentioned NATO and regional specialists tended to blame Russia. Along with the multiple leaps in the realist argument outlined by Alexander Motyl in his recent Monkey Cage post , it also fails to explain the timing of Russia’s aggression […]

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MOSCOW — Facing Western sanctions and low oil prices, Russian companies are lining up for subsidies from the government. But the demand for bailouts is quickly outstripping the supply of money, raising the prospect of an economic crisis here if the funds run out. With the economy flailing, the Russian government set up a corporate bailout program last year, tapping one of the country’s sovereign wealth funds . Almost immediately, companies started applying. The state-owned oil giant Rosneft has requested $21.3 billion. Gazprom, the dominant natural gas player, has asked for $3.2 billion for a subsidiary. The list goes on: Russia ’s railroad monopoly, which is also the largest employer in the country; an owner of Moscow’s airports; a venture capital firm investing in nanotechnology; and a company exporting Russian nuclear power plants. So far, companies have requested at least $37 billion, a figure that is likely to rise […]

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