The decision by the Organization of Petroleum Exporting Countries (OPEC) to keep production at its current limits in the face of slumping oil prices means trouble for the Russian economy, analysts believe.
Despite hopes from members Venezuela, Iran and Iraq that the 12-counrty oil cartel would cut production from its current 30 million barrels a day, the committee, led by Saudi Arabia, sent out the message that it could cope with lower oil prices.
Brent crude was hovering near a four-year low early Friday of $72.43 a barrel, while U.S. crude futures tumbled Thursday nearly $6 to $67.75, the lowest since May 2010 after OPEC’s decision. Crude prices have fallen around 30 percent since June on the back of an abundant supply and lack of demand. As such, there was hope that OPEC might support prices by cutting production but these were dashed on Thursday.
Along with the currencies of other oil producing nations, such as Norway and Canada, the Russian ruble fell further after the OPEC decision was announced. On Friday, it was trading at 49.14 against the greenback, having dipped from 47.39 against the greenback ahead of the OPEC decision on Wednesday. Russian stocks also dropped on the news but the country’s MICEX index had recovered to trade slightly higher Friday morning at 1,533.
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