Russia's losses from a ruptured oil deal with OPEC is estimated at $150 million a day, the ruble may weaken to 80-90 rubles to the dollar

co-Owner of oil company Leonid Fedun co-Owner of oil company “LUKOIL” Leonid Fedun has estimated losses of Russia from the collapse of the deal with OPEC, which controlled world oil prices the past three years, 100-150 million dollars a day.
bioraven / DepositPhotos Leonid Fedun
AGN Moscow

co-Owner of oil company “LUKOIL” Leonid Fedun has estimated losses of Russia from the collapse of the deal with OPEC, which controlled world oil prices in the last three years in 100-150 million dollars a day.

Such losses arise from the expected fall in oil prices from the level of 60 dollars per barrel (when you save a transaction with OPEC) to about $ 40 per barrel in the volume of Russian exports of 5 million barrels a day, Fedun explained The Bell.

“This is very sudden, irrational, to put it mildly, the decision”, – said he, confessing that he dwells in “light shock”. Russian companies have said they want to increase oil production, but growth of 2-3% will not compensate for future losses, says Fedun.

the cancellation of the transaction on the reduction of oil production has led to the fact that the price of a barrel of Brent at the end of trading on March 6 fell more than 9% to 45,34 USD. This is a record one-day drop in prices over the past 11 years, Reuters reports. All respondents of The Bell and the world’s largest media analysts agree that the result of the collapse of OPEC the price of oil falls to $ 40 per barrel and below.

According to the analyst Rystar Energy Barnara of Thonhausen, Russia’s decision to withdraw from the deal “will create one of the most severe price crises in the history of the oil market.” IHS analyst Markit Roger Couch admitted that oil could drop to a minimum over the last 20 years. A 20-year low was recorded in 2001 to 17.5 dollars per barrel.

the price of oil tugged the ruble. The dollar by Friday evening, climbed on the Moscow stock exchange up to 68,44 ruble (+84 pennies per day), the Euro – to 77.5 (+1.64 rubles). Analysts assume that in case of further decline in oil prices, the Russian currency may weaken to 80 rubles per dollar, and in the case of the global recession – even up to 90 rubles per dollar, says Forbes. The impact this will have and coronavirus infection.

“In April the pressure on the ruble will increase. If oil drops below $50 per barrel, the rate will rise to 70 rubles per dollar. If it drops below $40, then the exchange rate will be above $75. Oil under a negative scenario, which can reach $30 per barrel, then the Russian currency will fall to 80 rubles per dollar,” – says a senior analyst on the financial markets of Raiffeisenbank Denis Poryvai.

the Decision to withdraw from the deal was a big mistake, concur senior Director of the division of corporations of Fitch. “Protracted free fall quotes, as it was in 2015-2016 are unlikely to be repeated. Moreover, when prices fall below $40 inevitably reduce shale production in the United States that can help balancing the world market. Russia’s removal of restrictions on mining at this price is extremely profitable. The effect of the growth in exports will dissolve in a sea of losses from falling prices, towhich will give for this oil”, – the expert commented to “Vedomosti”.

“the fact that the parties are unable to reach a compromise, is surprising, since the effectiveness of the mechanism has been tested for the past three years, says the head of the international practice group of KPMG for the provision of services to the oil and gas sector companies Anton Usov. – Perhaps this happened because of the disagreement in distributed volumes. In my opinion, today’s decision by Russia is unprofitable, conservation agreements would be more positive scenario.”

the Transaction is OPEC+ on the reduction of oil will cease to operate from 1 April. Russia will continue to cooperate with the cartel in the framework of the Charter on cooperation, but the commitment to production cuts by OPEC member countries and non-cartel countries are removed.

the cause of the rupture of the oil Alliance became the position of Russia does not agree to additional restrictions on oil production. The main lobbyist of cancellation of the transaction has always been the head of “Rosneft” Igor Sechin, who since her confinement opposed production cuts. A year ago in a letter to Russian President Vladimir Putin, Sechin called OPEC+ “threat to development of Russian industry”. He noted that the agreement actually created for not participating in the deal, the US preference for the expansion of the market presence.