Posted 29 ноября 2022,, 11:42

Published 29 ноября 2022,, 11:42

Modified 24 декабря 2022,, 22:38

Updated 24 декабря 2022,, 22:38

The flow of petrodollars is declining - the ruble has no other options but inflation

The flow of petrodollars is declining - the ruble has no other options but inflation

29 ноября 2022, 11:42
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The main outcome of the year for the Russian oil and gas sector is the loss of the European market. Pipeline gas deliveries to the "Old World" have practically vanished.

On December 5, the embargo on oil will begin to operate in the EU. Against the backdrop of a collapse in foreign exchange inflows, experts warn of an imminent weakening of the ruble and a deficit of the dollar and the euro.

Yekaterina Maksimova

Despite a series of events in 2022, according to the results of 9 months, the positive foreign trade balance of the Russian Federation still remains a record - $ 251 billion, Alexander Potavin, an analyst at FG Finam, recalled. Financial analyst Stepan Demura adds: “Only this is not cash dollars and euros. And records in electronic invoices that this currency is here and now. And tomorrow these electronic records can be erased and they will not be”.

According to both experts, a reduction in oil and gas exports and a decrease in the inflow of foreign currency (primarily dollars and euros) to the Russian market will increase the currency deficit.

At the same time, experts agree that there will not be a sharp collapse in the flow of petrodollars in December. If only because, as Potavin recalled, that Western countries give a transitional period during which previously purchased Russian oil will continue to flow to foreign buyers. “That is, there will be no sharp collapse in supplies and inflow of foreign currency after December 5,” Alexander Potavin believes.

Stepan Demura, like other analysts of the fuel and energy complex , is sure that offshore oil supplies to Europe will not stop at all in December. And Europeans will start buying "black gold" from Russia on the "gray market" and through "gray" oil tankers. “Just a little more discount. Now it is already more than 30 dollars per barrel to the Brent rate. They will buy on the gray market, so the euro and the dollar will not suddenly disappear like that,” Stepan Demura is sure.

A private investor, the founder of the School of Practical Investing, Fyodor Sidorov , believes that the discussed introduction of a ceiling on oil prices by the G7 countries will not have any significance for the national currency at all, unlike world quotes.

“If a price level of $60-70 per barrel is introduced, it will turn out to be even higher than the Russian grade Urals is currently trading. Currently, Russian raw materials are sold at a discount of $40 per barrel at a price of $52 per barrel. This is happening as demand in Europe fell on the eve of the introduction of the price cap, and Asian buyers dictate their own rules and demand a discount. In such circumstances, the introduction of a ceiling on oil prices simply does not make sense - Russia is already selling its raw materials cheaper than the planned "ceiling", Fedor Sidorov specified.

But the cost of Brent crude on the world market fell to $81.24 per barrel (-2.9%). “It is most likely that quotes will remain under pressure, as the global recession, the decline in production around the world (primarily in Europe and China) will put pressure on the cost of raw materials. And this, in turn, puts pressure on the ruble, which will move towards a gradual weakening,” adds Fedor Sidorov.

Will affect the ruble and turn the oil and gas sector to the East. Recently, India, the largest importer of Russian oil, is ready to pay for "black gold" in national currency.

“Settlements in national currencies are of great importance for mutual trade between India and Russia. In 2021, India, for example, exported to Russia mainly pharmaceutical products, tea and coffee in the amount of $3.3 billion. Deliveries of goods to India from Russia are estimated at $6.9 billion, including defense goods, minerals, fertilizers, metals and precious stones. That is, the Russian Federation with India previously had a positive trade balance, which this year may become even larger. In the event of a transition to payments for oil in rubles and rupees, the inflow of hard currency into the Russian Federation will decrease, but this should not significantly affect the overall trade balance,” Potavin said.

Analysts are confident that the rate of the Russian currency, which has recently reacted very poorly to geopolitical escalation, will begin to change quite soon.

Fedor Sidorov believes that the ruble, which has remained strong for several months in a row, will fall in price up to 70 rubles per dollar by the end of this year. Alexander Potavin predicts the weakening of the ruble closer to the spring of 2023.

“Probably, by this time, the negative economic effect of sanctions on oil will begin to appear. This will be expressed in a decrease in the inflow of foreign currency from exports. If, at the same time, import costs grow, then we can expect a weakening of the Russian currency to the area of 65 rubles per dollar and 70 rubles per euro, ”the expert of FC Finam believes.

The founder of the "School of Practical Investing" advises Russians who need it to have time to stock up on cash. “In the context of the economic crisis that our state expects in 2023, in any case, it is necessary to form a financial cushion and protect our savings. Foreign currency is the easiest and most familiar way. The ruble has no other options but to fall against the dollar and the euro, so it's worth buying the currency now,” Fedor Sidorov believes. Stepan Demura advises not to convert rubles into euros without the need, but to invest in the US currency while it has fallen in price, the expert advises. "Dollar and gold - nothing has changed over the past ten years , " he said.

Potavin recalls that, according to the Central Bank, in early October, the Russian banking market experienced a shortage of foreign exchange liquidity. “As the regulator notes, this happened due to a sharp reduction in balances in dollars and euros on correspondent accounts of individual banks. The shortage of currency faced by banks was, in particular, caused by the outflow of funds of legal entities and the population from foreign currency deposits and accounts. In this case, it was a non-cash currency. There are fears that over time, the shortage of dollars and euros may become a problem. This can both affect the exchange rate and increase the difference between cash and non-cash dollars and euros,” Potavin said.

The authors of the telegram channel Ecworld offer to look back a little and recall the words of Russian officials.

“Still, they remember how in the spring the Central Bank said that they cannot keep the exchange rate high for the budget, because there is a lot of currency coming in, and the Central Bank cannot interfere. <…>”, writes Ecworld and draws attention to the fact that the dollar exchange rate cannot be so the same for months in a row.

“It turns out that the Central Bank deceived us again? Are there any tools? To manipulate the course. With the help of which they first lowered the course to where (who) needs it, and then kept it there. But time... tick-tock. As well as expenses: the closer to the 2024 elections, the more (in addition to financing the SVO) it will be necessary to maintain the vertical and loyalty of the elites of the regions during the preparation and process of the 2024 elections. But, these “wild descendants of the peasants” understand/accept only the vile green paper - and it will need a lot in 2023-2024. Therefore, the long-term movement is obvious. And we were all given enough time to participate in this auction of generosity,” the authors of the Ecworld IG channel say.