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It’s Oil, Stupid, as Russian Rates Powerless: Chart of the Day

Investors are betting that the Bank of Russia will raise interest rates tomorrow after it exhausted all other options for stabilizing the ruble. A look at the oil price suggests that too may be futile. The CHART OF THE DAY shows the ruble tracking the price of Brent crude over the past 12 months, with both falling 39 percent. The annotations show when the benchmark rate was increased with no notable response from the nation’s currency. The currency has tracked the slumping oil price even as the central bank freed itself up in November to intervene as much as it chooses and choked off access to rubles in an attempt to deter speculators. The bank has increased its main rate by 400 basis points this year and will raise it by 50 basis points to 10 percent tomorrow, according to the median estimate of 27 economists in a Bloomberg […]

Posted On : Published By : Tom Whipple
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Kremlin lauds ties with energy-hungry China

Russian Foreign Minister Sergei Lavrov describes ties with China as a relationship based on mutual trust and non-interference. UPI/Li Tao/Pool MOSCOW, Dec. 9 (UPI) — The growing relationship between Russia and China in the new century is supported in part on energy agreements, Russia’s foreign minister said Tuesday. "The course of Russian-Chinese relations takes into account core interests of the two nations and we have no plans to change it," Foreign Minister Sergei Lavrov said in a Tuesday interview with state-backed news agency Sputnik, formerly RIA Novosti. Lavrov last month said developing a foreign policy vision that emphasizes ties in the Asia-Pacific is a national priority for the Kremlin. A Russian economy hobbled by a reliance on Europe as a destination for oil and natural gas, whose exports account for more than half of Russian revenues, has pivoted toward energy-hungry Asia-Pacific . Western powers have sanctioned the Russian energy […]

Posted On : Published By : Tom Whipple
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Ukraine expects Russian gas supplies to resume Monday: minister

KIEV (Reuters) – Ukraine expects Russia to resume supplies of gas from Monday after Kiev transferred a pre-payment of $378 million to Gazprom, its energy minister said on Sunday. Russia cut gas deliveries to Ukraine in mid-June in a dispute over prices and debts and supplies have remained suspended while the haggling played out against a background of worsening political relations caused by the separatist war in Ukraine, which Kiev says Moscow is promoting. Cash-strapped Kiev had delayed buying new supplies for as long as possible and had been drawing on severely depleted reserves to meet consumer demand as increasingly cold weather set in. But with freezing temperatures and in line with a deal signed by Ukraine’s gas company Naftogaz and Gazprom in October, Kiev late on Friday transferred $378 million to the Russian gas giant as an upfront payment for 1 billion cubic meters of gas for December. […]

Posted On : Published By : Tom Whipple
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Vladimir Putin’s religious, ethnic rhetoric gets a little scary in Russian state-of-the-union address

Tags: crimea | Russia | state of the union | Ukraine | vladimir putin Vladimir Putin lives in a scary world, where enemies plot tirelessly to undermine, trick, and destroy Russia. Containment wasn’t just a Cold War policy but a practice of Russia’s rivals for centuries. Even without a conflict in Ukraine, the United States and European Union would have come up with another pretext for imposing economic sanctions; they were an inevitable response to a rising Russia. In his annual state-of-the-nation address on Thursday, the Russian president laid out his version of the year’s events in an effort to shore up support for his confrontation with the West amid growing economic troubles. The one-hour speech, held before 1,000 politicians and other public figures in the Kremlin, was defensive, strident, and formulaic. At moments, it was hard to tell whether Putin really believed everything he was saying — or […]

Posted On : Published By : Tom Whipple
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Low appetite dragged South Stream down

Low appetite for more natural gas in part behind the decision to revisit the South Stream natural gas pipeline, Fitch Ratings said. (UPI/Shutterstock/smereka) Fitch Ratings said. Russian officials this week said they were suspending the effort to build the South Stream natural gas pipeline across the Black Sea to the European market. Wary of the role of Russian energy company Gazprom in the European market, lawmakers in the European Parliament this year called for a suspension of South Stream contracts. Fitch, in a note sent Friday to UPI, said the decision reflects low demand for additional natural gas volumes in the European market as much as it does frustration with Russia’s role in the market. "We believe that there is little appetite among large utilities to commit to more long-term import contracts," the ratings agency said. "This is because demand has been cyclically and structurally weak as market economics […]

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South Stream decision ‘final’

Russian Energy Minister Alexander Novak says Gazprom’s South Stream gas pipeline project is dead. (UPI/Shutterstock/Igor Golovniov) "In my view, the decision is final," Minister Alexander Novak said from Moscow. With a delegation from natural gas company Gazprom in tow, Russian President Vladimir Putin declared an end to a project that would cross the Black Sea to the European market during a visit to Ankara. Instead, Gazprom said it was pursuing an alternate option for the Turkish market. "Today we’re working on the construction of the pipeline by another route," the minister said. Early this week, German steelmaker Salzgitter AG, a pipeline contractor, said it would seek compensation through insurers following Putin’s announcement. Saipem, the contracting subsidiary of Italian energy company Eni, said it’s received no word on the status of South Stream . "Operational activities therefore continue to progress," the company said. South Stream was Gazprom’s answer to energy […]

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Putin, Amid Stark Challenges, Says Russia’s Destiny Is in Hand

MOSCOW — The defining event of Vladimir V. Putin ’s initial rise to power was the crushing of an Islamist insurgency in Chechnya, at the cost of human rights abuses and years of dictatorial rule there. The defining event since his return to the presidency two years ago was his hard-line response to the Ukraine uprising in February, with the invasion and annexation of Crimea and the incursion into southeastern Ukraine — while sneering at critics in the West. On Thursday, Mr. Putin was forced to contend with trouble on both fronts, as insurgents mounted a deadly attack in the Chechen capital of Grozny, and he was compelled in his yearly address to reassure Russians that his assertive foreign policy would not bring economic ruin. An overnight attack in Grozny left at least 20 people dead and shattered years of relative calm. Yet just as the attack reminded Russians […]

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Russia to Pump Up Oil Exports to Asia

A general view shows the Kozmino oil-loading port in the bay of Kozmino. ENLARGE A general view shows the Kozmino oil-loading port in the bay of Kozmino. Reuters SINGAPORE—Russia plans to keep increasing its oil exports to Asia despite plummeting oil prices and Western sanctions , even as its oil supplies to the region hit record levels this year. Russia is making a strategic push to increase its energy exports to Asia, as energy demand in its traditional markets in Europe has stagnated and its relationship with countries there has been strained by sanctions over Moscow’s role in the conflict in Ukraine. Russia’s oil exports to Asia have been spearheaded by the East Siberia-Pacific Ocean, or ESPO, pipeline since 2009. The pipeline feeds directly into northern China and up to the port of Kozmino in eastern Russia where crude is loaded on ships to supply the rest of Asia […]

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Falling oil prices hit Russia much harder than Western sanctions

President Vladimir Putin, who took office in the wake of his nation’s 1998 financial crisis, has made economic stability a cornerstone of his nearly 15 years as leader. (AP) MOSCOW — Plummeting oil prices are doing to the Kremlin what sanctions could not: forcing a grim rethinking of Russia’s economic future. Nine months into the worst relations between the West and Russia since the Cold War, the plunging price of oil is causing deeper and swifter pain than the Western sanctions that have targeted key areas of Russia’s economy. Russian leaders said Tuesday for the first time that their economy will head into recession next year. In a nation where oil and gas exports largely determine the bottom line, lawmakers are slashing spending promises. And the ruble is hitting historic lows every day. President Vladimir Putin, who took office in the wake of his nation’s 1998 financial crisis, has […]

Posted On : Published By : Tom Whipple