Will the price of oil pull down the Russian ruble?

A few days ago, namely on November 18, the price of oil began its decline, which continues to this day.

In just a few days, the price of BRENT fell from $63.30 per barrel to $60.70, which is more than 4%.

The main reasons for the decline were the failure of trade negotiations between the United States and China and the failure to make a decision to reduce production by major oil exporters.

The latter has led to an oversupply of black gold in the energy market; according to some estimates, this surplus is about 1 million barrels at daily trading.

There is no breakthrough on this issue yet, so there are all the prerequisites for a further fall in the price of BRENT oil below $60 per barrel.

What will happen to the Russian ruble?

It is clear that such “rosy” prospects cannot but affect the exchange rate of the Russian ruble, but it is not surprising that the first news led to some strengthening of the ruble against the US dollar:

True, this did not last long and after strengthening to 63.66 rubles per dollar, the Russian currency began to fall in price and now its rate is 63.81 to the US dollar.

The low price of oil causes a reduction in tax revenues to the federal budget, since the average price of the Urals brand included in the 2019 budget is $63.4 per barrel.

At the moment, the price of Urals is at $57.77 per barrel, that is, almost 10% below the average level prescribed in the 2019 budget.

It is clear that this fact cannot but affect the exchange rate of the Russian ruble, which will most likely continue to fall to 65 rubles per 1 US dollar.

And perhaps even lower if oil prices continue to fall further. In this situation, there is a chance to earn a little money by selling the ruble, but you should constantly monitor news from the oil market so as not to miss the beginning of an increase in the price of oil, which will happen sooner or later.