Oil and the ruble are getting cheaper: experts gave a disappointing forecast

The dollar exchange rate may skyrocket

Oil quotes on the world market continue to decline and drag the Russian currency. During the last trades, the price of a barrel of Brent brand fell to $70, which became an anti-record in almost a year and a half, and the dollar exchange rate eventually exceeded 77 rubles (the euro – more than 82 rubles). According to experts, the financial problems of Washington became the reason for what was happening. In connection with the collapse of large banks in the United States, the Federal Reserve Service (FRS) will have to raise interest rates on loans in the “green”, which will cause the flow of money from stock investors from commodity assets to dollar ones.

The price of a barrel of the benchmark Brent brand, which was predicted to strengthen above $100 back in January, collapsed to $70. This was the biggest drop since December 2021. Summer commodity futures are trading even lower. The exchange rate of the Russian currency, traditionally heavily dependent on the quotes of “black gold”, also began to decline, losing about one percent of its value to the dollar and the euro in just a day.

Such an unpleasant trend is due to a combination of different market circumstances. “The fall in oil prices is caused by increased risks of another round of global recession. There is a good saying about the “black gold” market: “either there is a lot of raw materials, or there is not enough of them,” notes financial analyst Sergei Ramaninov. Now there is no shortage of energy resources in the world market. According to Gas Infrastructure Europe and the London-based ICE stock exchange, gas reserves in underground storage facilities of the Old World are increasing, while exchange prices for hydrocarbons continue to decline. Oil quotes, closely related to the cost of “blue fuel”, are also falling.

Meanwhile, according to TeleTrade analyst Alexei Fedorov, the banking crisis in the United States caused the greatest damage to oil prices in recent weeks. In early March, several large American financial institutions went bankrupt, whose assets lost $52 billion in just a day. Investors began to sell shares of JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, which provoked a further decline in the value of their securities. “Financialists are afraid of a repeat of the cyclical downturn in the global economy following the example of 2008-2009, when the collapse of the American bank Lehman Brothers served as a trigger for a reduction in global GDP by 2.2% and a decrease in global oil demand by 6-8%,” says the source of MK “.

Under the current conditions, international stock exchange tycoons began to pay closer attention to the decisions of the main regulators of the global financial sector. A sensible effect on the commodity and currency markets may have a meeting of the Fed, to be held on March 22-23: if Washington decides in favor of raising interest rates, then interest in the dollar as an instrument for investing will continue to grow. The reverse decision is capable of spurring investors to instantly reorient themselves to the commodity market and increase the conclusion of oil contracts.

With regard to the ruble exchange rate, one can also find optimistic tendencies. According to Bloomberg, the G7 countries and EU members, apparently, will not agree to a revision in the direction of tightening the “ceiling” of prices for Russian oil in the near future (Estonia, Lithuania and Poland are calling for this). According to a source in the European Commission, “interest in changing the price level at this stage among Western countries is still small.” If the “ceiling” does not shift in the negative direction, then Moscow’s foreign exchange earnings from the sale of hydrocarbons abroad will at least somehow reduce the federal budget deficit, which reached 2.6 trillion rubles in February.

However, there are much more effective factors ready to lower the “wooden” down an even more inclined plane. “A warning from the Central Bank that one should not blame the stock quotes of energy resources when forecasting currency corridors was made last year. The regulator pointed to the maximum effect of Western sanctions that the domestic financial sector will experience in 2023. Numerous fundamental factors due to the economic pressure of our political opponents do not allow Russian banknotes to strengthen,” says private investor Fedor Sidorov. The fall in exports and the decline in treasury revenues do not give chances for long-term stabilization: as a result, in the coming months, the market may see the dollar at 80-82 rubles, and the euro at 85-87 rubles.