According to the International Monetary Fund, Russia needs an oil price of roughly $40 a barrel to balance its budget, while Saudi Arabia needs over $80 a barrel to balance its books. “All these uncertainties, which are now on the market: how China will behave, how India will behave... trade wars and unpredictability on the part of the US administration... those are defining factors for price volatility,” Novak said. And I think that the market is underestimating that they are going to cut supply by 1.2 mb/d,” Dominic Schnider of UBS Wealth Management told CNBC. Russia is a key piece of the oil price puzzle. Russians were getting richer as rising revenues from oil and gas brought cash into the country. The former have stalled. MOSCOW, RUSSIA - MARCH 08: A general view of Moscow is seen from Begavoy Build, in Moscow, Russia, ... [+] on March, 08,2020. Second, tax payments for Russian oil companies are structured in such a way that their tax burden is lighter with lower oil prices. Strict budgetary rules stipulate that Russia can only spend funds from its NWF when its reserves exceed 7% of the country’s GDP. 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That’s really predicated on the thought that first of all, OPEC still is here. Now prices have fallen sharply. It is not obvious further military campaigns would compensate. Nevertheless, Novak predicted the 1.2 mb/d cuts announced in Vienna would be sufficient. “But nobody was scared,” he said, according to Bloomberg. The Finance Ministry's confident words about the National Wealth Fund are proof of that. Vladimir Smirnov/TASS (Photo by Vladimir Smirnov\TASS via Getty Images). My correspondent career also included postings to Brussels and the Middle East. There are a few reasons for this. From 2003-2008, he was a manager in the international affairs team at TNK-BP. “Many people criticised us, they said this is a kind of treasure chest, that the finance ministry is sitting on gold and pining over it,” said Siluanov. Putin's popularity was built first on rising living standards at home, and, later, on military successes abroad. "There has been significant trickle down effect for Russian society at large. Even after the shock fall in prices, it is hard to foresee the kind of crisis that could disrupt Putin's presidency. I first visited the Soviet Union as a language student in the 1980s. “Everything will depend on technological and climate possibilities. We will get proposals from the companies,” Novak said, according to Reuters. 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I am the author of "Assignment Moscow: Reporting on Russia from Lenin to Putin" (published in the U.S. and the U.K. in July 2020) and three other books on international. Many OPEC members are either at maximum capacity, are suffering from production declines at aging fields, or are characterized by instability, making any promises to boost or cut production hollow. “But now the situation could change and we will finance all the expenses we have undertaken and are obliged to make with this treasure chest.”, Reporting by Darya Korsunskaya, Additional reporting by Alexander Marrow, Writing by Alexander Marrow, Editing by Alexander Smith and Kirsten Donovan. "Putin has started this reshuffling of the pack in fact very early given that 2024 is the date when in theory he should leave office. OPEC, once a coalition of oil-producing members that made joint decisions to maintain market stability, has morphed into a Saudi-led cartel that desperately needs Russian cooperation to strengthen the group’s efforts. At the same time, Novak offered the market some assurances that the OPEC+ coalition would step in to stabilize the market if the situation deteriorates, suggesting that OPEC+ has the ability to call an extraordinary meeting. He said Russia had become less exposed to fluctuations in the oil market, but reducing the country’s reliance on its main export was not something that could be achieved quickly. "I think that without those revenues the Putin system would not have established itself in the way that it has," Lough says. He told reporters in late December that the market still faces a lot of unknowns. This website uses cookies. All Rights Reserved, This is a BETA experience. Subscribe to RT newsletter to get stories the mainstream media won’t tell you, The Siberian Maslenitsa festival in the Altai village of Novotyryshkino © Sputnik / Andrey Lukovskiy, Cha-ching! Under the terms of the Russian constitution, Putin is due to step down in 2024. That would put Russian output at about 11.35 mb/d, not far from the post-Soviet high of 11.41 mb/d hit in October. Russia has been reluctant to increase the existing 2.1 million bpd reduction by the group known as OPEC+, despite fears over demand with the coronavirus outbreak expected to hobble economic growth.

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