Russia has one of the largest petroleum industries in the world, the largest exporter of natural gas, and one of the largest oil producers. Amid the Russian-Ukraine conflict, the Russian economy is entering a recession, and facing many sanctions from world organizations. Country’s Finance Ministry has proposed a raise in the oil cut-off price, the idea is proposed to uphold the value of the ruble and to bring hard foreign currency in the country with its energy earnings. The Ministry also proposed a reduction in the production of oil, which was lastly calculated at 10.55 million barrels per day to now making it 9.5 million barrels a day.
What will happen, if the new budget is imposed?
- The new oil cut-off price would be $60 per barrel, from the last fixed $40 per barrel.
- A presumption has been made, that ruble might get 10-20 rubles weaker against dollars.
- Russian GDP might face a decline by double digits.