Russia down 11%

originally posted by: aightism2
driving the price of oil down to cripple Russia´s exports is an act of war

yeah right...because that's the real reason (sarcasm)....there is a lot more to this. Russia has increased their supply of oil and signed a contract to build a pipeline into china....Saudi Arabia is not turning down the spigot as it used to.....America now the second biggest supplier of oil......drilling has become a lot more sophisticated.....smaller oil producing countries rely on their oil to pay government debts, thus they keep pumping.......all this and more, are contributing to the lower price of a barrel of oil on the world market.

Rushing has all its economic eggs in one basket. That is never a good idea.

This is certainly a surprising and sharp drop. I wonder how the Russian leadership will react. I can tell you now, it probably won't be good.

originally posted by: IShotMyLastMuse
it will bounce back up like any strong economy would, and nothing more.

Strong economy? How is that? They don't produce anything apart from Oil/Gas and outdated weaponry.

originally posted by: boymonkey74
Interest rates just up to 17% a rise of around 7%.

www.bbc.co.uk...

And that was after they increased it from 9.5% to 10.5% last week, it's now jumped a massive 7%! Two interest rate hikes in the space of 7 days is a sign of severe economic stress.

originally posted by: ScientificRailgun
This is certainly a surprising and sharp drop. I wonder how the Russian leadership will react. I can tell you now, it probably won't be good.

I think you will find the Russian leadership is OK as they doubtlessly transferred their cash into dollars months ago.

It's the average Russian who has to live in a country rife with corruption who will suffer. This is why Putin and co have been playing the nationalist card in an attempt to paint Russia as the victim and not the cause of their own ills. Control of the press is part of that agenda.

Regards

originally posted by: paraphi
Well, this is what happens when you have an economy based on a commodity (oil and gas) which goes up and down in price. In Russia's case this is also compounded by sanctions for their interference in Ukraine, including the annexation of a part of the said.

It isn't this simple. Oil only dropped slightly over the past couple days while the Ruble dropped almost 17% vs the US $. No new sanctions during these couple days as well. You can't simply believe the MSM message cause it's generally a lie or just plain wrong.

The reality is that Russians themselves are turning against the Ruble. They lost confidence in it and have started massively hoarding Euro and US $'s. Russians are experienced at this game and they bail out of failing fiat currency faster than other citizens would. You won't see or hear about it because that would start a full blown panic, something they are pretty much in right now currency wise. This is why a massive jump in interest rates had almost no effect on the market for Rubles. People in Russia won't be keeping Rubles in banks anymore. They'll be storing Euros and US$'s under their mattresses.

Drop in oil prices only hurts a few oil companies and a few countries.

Russia needs $110 plus per barrel and add in the sanctions (which do hurt a lot) they are in trouble, serious trouble.

Venezuela needs $150 to $200 per barrel so we will see hyper inflation there and some real big unrest.

Canada needs $90 plus, so sorry Canadians, you will see higher taxes and a drop in your currency value to about .75 to .80 US cents to your dollar.

Fracking needs $80 per barrel, so this huge boom will go into hibernation to just bounce back about a minute after oil hits $80 again. Jobs will be lost...

Oil companies will take big hits on their stocks and profit....


So I suggest do not vacation in Russia or Venezuela, but have a good time in Canada...

Sell and don't buy oil stocks....

Enjoy the low gas prices that will also drop ALL consumer prices lower...


Why is this happening can be speculated a couple of ways, and on is it is a hit on Russia, but it is really Saudi controlling it and a good analogy would be what would DE Beers in South Africa do if a huge diamond supply was found in another country, but it cost $900 per carat to mine this almost unlimited supply. They would do the same thing, since they control world diamond markets. They have so many diamonds that diamonds would be $50 a carat if they didn't artificially control it, so they would drop their prices to $700 - $800 per carat, driving this other supply into a unprofitable condition.

WELL, the amount of oil available now through fracking is HUGE! So much it scares Saudi almost to death. So much that Saudi is willing to drop oil prices to over 50% so far. We will see oil sub $80 now for a very very long time....

To be totally honest, I really think oil should have been $75 and not the inflated $100 to $110 we have seen, so I really do not have the doom and gloom view that others have on all this.

The short answer to Russias problems is to get the price of oil high again. How can this be achieved? Thinking Syrian (Russian planes maybe) attack on Israel or something like that, maybe get Iran to do something similar. How can they get crude prices back up again?


a reply to: Xtrozero

a reply to: Xtrozero
If you think that it is not doom and gloom time for non-traditional oil extraction, than you are not exactly knowledgeable on the oil industry.

'Fracking' permits have dropped by over 40%...in November alone.

Also, stop throwing around BS government budgetary numbers and claim that they have any bearing on the actual industry.

That is what politicians use to buffalo the plebs, not what oil industry uses to analyse profitability.

Russia is tanking badly. They just raised interest rates to 17%.
Can now get two gallons of gas for a five dollar bill here in the US instead of the one gallon, hope it drops more.
Environmentalists can go suck a rotten egg, they all wanted ten dollar a gallon gas.
Funny how all this good stuff is happening right as Obama's Party lost the Senate and power.
With easing economic woes, the economy will be taking back seat to foreign policy in the next POTUS elections, where the liberals don't have a leg to stand on.

originally posted by: peck420
a reply to: Xtrozero
If you think that it is not doom and gloom time for non-traditional oil extraction, than you are not exactly knowledgeable on the oil industry.

'Fracking' permits have dropped by over 40%...in November alone.

Ya so? I didn't say it wasn't doom in gloom for "non-traditional oil extraction". I said they would go into hibernation, which means they would stop, which means jobs lost, which means just what I said.

Are you suggesting that an industry that wasn't in existence 5 years ago is on the verge of going away and never coming back? As soon as oil hits $80 they will be back, end of story. As soon as oil hits $200 barrel we will also see a hell of a lot of other alternate fuels that would then be profitable too.

The scenario where Saudi keeps oil sub $60 for a couple of years and then wipes everyone else out because of that just to then say $200 with no competition is stupid. If it stays sub $60 then there is no economical reason at that point to go other directions.

I think we should clear a few things up here. Russia economic troubles are its own because its economy is a one trick poney. Western Santitions have not caused Russia problems but, they are keeping Russia from fixing them using Western capital and investment.

Next the drop in oil prices was caused because they had become so high that fracking became profitable. Because of that the US began producing tons of new oil and prices dropped. OPEC saw two options drop production so prices rise a little because they can only afford to cut a certain amount. Or do nothing and ride out the price drop and hope to put the frackers out of business, at least for awhile.

Russia who is not a part of OPEC of course pushed them to cut production. However, the last time OPEC and Russia agreed to do that OPEC cut and Russia instead increased production and cashed in. This time of course OPEC is not going to go out of its way to help a country that screwed them over last time.

The Ruble is now worthless and inflation is rising. Russians are storing up items and food stuffs they expect will not be affordable in a few months. Russian authorities are making everyone aware stores must take Rubles and keep prices in Rubles instead of swithing to Dolllars or Euros. They are also stopping everybody (well at least the general population) from buying Dolllars. Russia is going to have some big problems down the road. Almost half its budget comes from oil and gas. That is a massive weakness for any economy because it makes it so vulnerable.

With even the price of bread shooting up Russian anti food santions on the West are now proving to be a disaster. If your Putin right now your not sleeping very well at night.

a reply to: ufoorbhunter

How about Azerbaijan?