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Published in Stream:
Russia Update: January 13, 2016
Press by
The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Ruble Hosts (Brief?) Rally As Oil Price Increases; Oil Projected To Fall
4 years
Prominent Putin Critic Vladimimr Pribylovsky, Co-Author of The Corporation, Found Dead in Moscow
3 Russians, Suspected Of ISIS Links, Arrested In Turkey
The price of a barrel of Brent Crude Oil was at one point trading a dollar higher than it was yesterday. As of 14:09 GMT, Brent was trading at $31.52 a barrel, down from $31.84 which it hit only 40 minutes earlier according to Bloomberg:
2016-01-13 14:45:03

The ruble also rallied for the first time in more than a week, but analysts are warning that the rally is likely to be short-lived. Bloomberg reports:

The currency gained 1.3 percent to 76.09 against the dollar by 3:47 p.m. in Moscow, the most on a closing basis since Dec. 23, as Brent crude climbed 2.2 percent to $31.55 a barrel. Bonds rose, with the yield on five-year government notes declining six basis points from a three-month high to 10.54 percent.

According to, which is monitoring both the ruble and Brent Crude in real time, the ruble is exchanging at 76.03 to a dollar and 82.45 to a euro -- bad, but an improvement over yesterday. Here is a screen grab taken moments ago:

2016-01-13 14:49:30

But as we discussed at length yesterday, the Russian government has cut its spending for 2016 and many analysts expect the ruble -- and the price of oil -- to continue to tumble, perhaps even approaching $20 a barrel.

The energy giant BP has just announced that it is cutting 600 jobs from its operations in the North Sea and will trim more than 4,000 staff members globally. This follows decades of a "drill baby, drill" attitude taken by certain politicians and oil companies that saw a large expansion in energy projects. Now, many future projects are on hold, but since investments were made a decade or more ago, energy production is expected to remain higher than demand for the foreseeable future. The Week reports:

Brendan Warn, senior oil and gas analyst at BMO Capital Markets, said the increase in production was only a result of investment decisions taken years before prices plunged and that as they have fallen, investment in new wells has been withdrawn. This lag means "North Sea oil and gas production news headlines will be horrendous in the 2017-20 time period".

The Week continues by saying that some are predicting oil prices to drop to $16 -- or even $10 -- per barrel:

Oil prices have fallen sharply again – and the latest range of investment bank forecasts has them dropping as low as $10 a barrel before finally bouncing back.

Turmoil on the Chinese markets, a strong dollar and more evidence of global supply remaining high despite an already heavily overstocked market prompted oil to fall sharply yesterday to a 12-year low. International benchmark Brent crude touched a low of $30.43 a barrel before steadying - and it had pared losses to a little below $30.90 this morning in London.

At its nadir, overnight oil fell close to 8 per cent from where it had been in London earlier in the day.

There are many variables that could change the dynamic and stabilize oil prices, or even make them fall further. But what's important is that it's nearly impossible to see how oil prices, or the ruble, could hold significant rallies in the foreseeable future. 

For Russia watchers, then, the questions are these: How long will the storm last, will Russia weather it, and will Putin make bold and potentially dangerous geopolitical moves out of desperation in order to change his fortunes or distract from his domestic economic problems?

-- James Miller