Russian Economy And Currency Taking A Pounding On Lower Oil Prices

russian economy

Who says pumping more American crude oil only makes profits for American big oil?  It’s also a factor in keeping the dictators of the world who finance their regimes with higher oil prices at bay more effectively than saber rattling ever could.  Take Russia, for example.

Oil prices, which fell below $60 per barrel on the international Brent crude index for the first time since July 2009, may be the main culprit for the ruble’s year-long slide. Putin’s government derives roughly half its budget from oil and gas revenues, and many analysts are predicting a Russian recession in 2015.

 

The ruble exchange rate follows the price of oil, and “it’s always been like that,” Vladimir Dmitriev, chairman for Russian state-owned bank Vnesheconombank, recently told German newspaper Der Tagesspiegel. He estimated that the Russian economy lost $100 billion when oil prices fell from $110 per barrel to $80.

And as Sam Ori, executive vice president with Securing America’s Future Energy, said of Russia and its ambitious leader Vladimir Putin, it may just hand-cuff plans for 2015.  To make matters more dicey, the Russian Central Bank hiked interest rates overnight and currency traders were not amused.  The Ruble fell even further against a strengthening dollar.

Together with tough sanctions from the west, falling oil prices may well keep a lid on Russia’s advances on the west and in Ukraine.  Time will tell if Putin understands economic reality well enough to pull back on the military spending.

About the Author

Cultural Limits
A resident of Flyover Country, Cultural Limits is a rare creature in American Conservatism - committed to not just small government, Christianity and traditional social roles, but non-profits and high arts and culture. Watching politics, observing human behavior and writing are all long-time interests. In her other life, CL writes romance novels under her nom de plume, Patricia Holden (@PatriciaHoldenAuthor on Facebook), and crochets like a mad woman (designs can be found on Facebook @BohemianFlairCrochet and on Pinterest on the Bohemian Flair Crochet board). In religion, CL is Catholic; in work, the jill of all trades when it comes to fundraising software manipulation and event planning; in play, a classically trained soprano and proud citizen of Cardinal Nation, although, during hockey season, Bleeds Blue. She lives in the Mid-Mississippi River Valley with family and two cute and charming tyrants...make that toy dogs.