Simon Zhavoronkov: Dokhi collapse

Simon Zhavoronkov Doha marc.desbordes

On Monday, after the opening of trading on the Moscow Exchange, the ruble, along with stock indices, expectedly collapsed. The Russian currency, and after it and the shares of Russian companies, lose weight due to the failure of negotiations in Doha, which discussed the possibility of freezing the volume of oil production.

Immediately after the bidding began, for the first time since the beginning of April, he exceeded 68 rubles, reaching a value of 68.8 rubles - this is 2.353 rubles higher than the closing level of the trading on April 15. The euro at the same time reached 77.736 rubles, which is 2.786 rubles higher than the closing level of previous bidding.

An hour after the start of trading, the RTS index fell by 3.5%, MMEVB - by 1.1%.

Then, however, the ruble began to win back the fall, but not so significant - in the first minutes of trading, the dollar and the euro fell by about 40 kopecks.

The weakening of the ruble was expected: after it became known about the failure of negotiations in Doha, the price of oil on world exchanges fell by several percent. Although such a result of the meeting, in principle, was also expecting, many optimists hoped that the largest exporting countries would still be able to reach an agreement on freezing oil production.

Negotiations in Doha. Photo: minenergo.gov.ru

True, even an agreement on freezing the level of production would not bring such a desirable return of the price of the resource to sky -high altitudes. Already today, there is more oil in the world than consumed, in addition, many countries that are going to increase export, such as Iran and Libya, have indicated their position in advance: there can be no talk of any freezing. And, for example, Russia, without freezing, cannot actually not increase oil production for technical reasons, so Moscow proposals to introduce new restrictions look quite selfish.

In general, all statements of officials involved in the oil market from Russia and OPEC countries do not look too serious. After the “shale revolution” in the United States, oil price is determined not by the level of production in the bay or other “old” oil powers, but by the cost of energy production in the United States. Premium at shale fields can be both easily frozen and quickly increased, so in the case of falling oil prices below a certain level of production in the United States, it is quickly reduced, in case of price growth, it is also quickly increased.

The growth of shale gas production in comparison with other types of natural gas Source: US Energy Information Administration

The cost of shale oil and shale gas production is an ambiguous question, in addition to each month due to the development of technology, it is reduced. But now, for most towers, the cost does not exceed $ 30-40 for the equivalent of an oil barrel, so that energy prices are unlikely to go far from this corridor.

Against this background, the ruble behaves even more confidently what could be, the Russian currency fell clearly less than the price of oil. We can say that this is what a gradual rejection of oil dependence looks like.

See also: the dollar and the euro took off to the ruble after negotiations in the doha prices of oil began to fall after the negotiations in the doh Oleg Eliseev oil on the threshold