.comment-link {margin-left:.6em;}

Cracker Squire

THE MUSINGS OF A TRADITIONAL SOUTHERN DEMOCRAT

My Photo
Name:
Location: Douglas, Coffee Co., The Other Georgia, United States

Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Monday, December 08, 2014

Vladimir Putin is talking tough—but the falling oil price is making Russia weak.

From The Wall Street Journal:

Vladimir Putin is talking tough—but the falling oil price is making Russia weak.

The Russian president has promised to bolster his country’s banks with public money. He has taken potshots at the speculators he blames for the ruble’s collapse. For investors, one worry is the risks to European banks through their lending to Russian clients and the oil industry in general. Thankfully, the exposures mostly look manageable.

Russia is falling into recession. Fighting that with fiscal measures is tough because the government gets half its revenues from oil and gas taxes. In November, an oil price of $98 a barrel was needed to balance the budget, according to Fitch. Brent crude has since plunged to less than $70.

Last month’s decision to let the ruble float freely eases some strain. Its drop implies the budget-balancing oil price has dropped to about $82.50. But a slowing economy also means more reliance on oil receipts. The true break-even price might be nearer to $85.

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home