Posted on 12/18/2015 5:20:06 AM PST by Berlin_Freeper
Picture the scene. It is 2016, oil costs on average $35 per barrel, and Russia’s recession rolls into its second year. The economy shrinks by 2-3 percent. Unemployment creeps up, and wages continue to fall, depressing consumer spending. The ruble devalues, driving up inflation. To keep price rises in check, interest rates remain high, discouraging investment. The government drains its reserves, hoping that the oil price picks up before they run dry.
This was the nightmare scenario painted by Russia’s Central Bank in its December research paper. The bank, and Russia’s federal budget, is still planning for average oil prices of $50 per barrel next year and an end to the recession by early 2017. But with the global oil market oversupplied and prices falling well below $40 per barrel, the likelihood of the pessimistic scenario is rising, the bank warned.
(Excerpt) Read more at themoscowtimes.com ...
Russia sits on an ocean of oil. As the price of oil has declined over the last few years, it has tripled its exports. Not surprisingly, the decline in the price of oil is correlated with the decline of the ruble. Everyone has presumed one order of cause and effect, when the opposite makes far more sense.
A hungry bear who is being poked by sharp sticks might be a dangerous thing.
Last time I filled up my tank here in little ol Kechi Kansas I paid $1.75/gallon. Me likey
Got it for $1.65 her in middle TN.;)
Odd that cheap oil only affects Russia isn’t it?
I remember when skools taught supply and demand. Guns and butter.
All Putin has to do is bomb the Saudis and blame ISIL. That will immediately raise the price of oil.
hopefully ISIS will keep poking the bear.
I am doubting that the Bear will sit still for this for long.
I’m hearing war drums of desperation.
This world is a very dangerous place. Dangerous because the US is weak just like we created danger in Iraq and Libya by removing the only means of order such places recognize and that are effective.
I am equally amazed that the rest of OPEC or the international bankers have allowed the Saudis to carry on this madness as long as they have.
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