Falling oil prices hit Russia hardest

• 10 years ago (2014-11-25)
• Junior Isles

Europe 1089 North America 1021

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Ahead of the next Opec conference, falling oil prices – coupled with geo-political sanctions – look set to hit Russia hard.
After Petrofac, the North Sea-based oil services giant, saw £1 billion ($1.6 billion) taken off its value on Monday, falling oil prices are on track to damage the Russian economy.

Anton Siluanov, Russia’s finance minister, said: “We are losing around $40 billion a year due to geopolitical sanctions [over Ukraine].” He added that the falling oil price was costing “some $90 billion to $100 billion per year”, as half of Moscow’s revenues are based on oil.

However, President Putin has dismissed the potential economic damage as “not fatal”, saying that the consequent depreciation of the rouble – 27 per cent against the dollar this year – will only superficially hurt the Russian economy.

Dispute this, Russia has been active lobbying Opec countries to cut production in order to limit the supply of oil and help counter US shale, and without a deal many producers fear that the price of crude will fall further from its current low of $80 a barrel (down from $86 last week).

Even without such a deal, Russian citizens and businesses will still probably convert savings into foreign currencies, leading to record capital outflows of $130 billion.