What the price of oil, the war will raise the dollar up to $ 100

Especially for “the Russian newspaper” Dmitry Babin, an expert on the stock market, “BCS”, described two scenarios where you can bring all these events:

Photo: Peter Kovalev/TASS Banks told about the demand of citizens for foreign currency after the ruble’s weakening

– In the oil market sparked a real price war. First, Saudi Arabia together with several other countries-oil producers announced plans to significantly increase oil production. And then announced it was ready to sell their barrels of Arab Light grade in Europe at a price of $ 25. Triple the volume of supply. This lowered the oil price to below 33 dollars a barrel.

there are two possible scenario for our economy and the rouble: good and bad.

the Pessimistic scenario assumes the continuation of the conflict oil producers for several years. Causing the price of oil may briefly drop even 15-20 dollars. However, such attractive prices in themselves stimulate consumers, increasing demand, and, therefore, taking the quotes back to higher levels.

However, within the acute phase of the oil crisis, the ruble may experience a strong reduction in the moment the dollar is able to go to level 100. However, it is unlikely it is a long time to gain a foothold there. In the long term stabilization of the oil market will return to a couple of USD/RUB to lower levels, perhaps even to those we saw last week (66 rubles per dollar).

Photo: EPA/Alejandro Ernesto the Price of Brent crude oil fell below 33 dollars per barrel

the Optimistic scenario assumes that, after seeing an avalanche falling oil and aware of the seriousness of the consequences of this trend for their state budgets, key members of OPEC+ in the coming months will begin negotiations on a new agreement to cut production. In this case, oil prices quickly back above the level of 40 dollars per barrel, while the dollar drops below 70 rubles.

But while oil prices are falling, and the ruble is rapidly losing ground. However, its weakening comparable with the size of the downward movement of oil. Because of this, the ruble cost of a barrel of Brent crude also rallied to fresh 4-year low, which is a negative factor for the Russian budget.

Therefore, without significant improvement in the situation on the oil market, the ruble will remain under pressure and the potential for recovery will be limited.

Thus, the Russian currency formed a very unfavorable combination of factors. And even if oil prices return to above $ 40, it is unlikely to cause serious long-term strengthening of the ruble.

Photo: iStock the dollar had risen to 75 rubles

After all, investors need confidence that the oil left, such low levels. But this is not enough for recovery Alliance OPEC+, since in addition to the threat of oversupply, oil pressure downside risks to demand due to problems in the global economy, exacerbated by the spread of coronavirus.

In the short-term horizon we can see a corrective growth of the ruble if the global Central banks will take further steps for monetary incentives associated with the increase in their balance. Howeverwithout the relief of pandemic coronavirus and obvious signs of resumption of the transaction of OPEC+ ruble risk to continue the systematic weakening like other emerging currencies.