Putin vs. the Crown Prince: Ruble Gives Russia Edge in Price War - Bloomberg:
If the oil face-off between President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman turns on who has a stiffer fiscal backbone, it’s the ruble that could help carry Russia to the finish line.
Saudi Arabia may boast the lowest extraction costs and more spare capacity, but it has little to counter Russia’s shock-absorber in its floating currency. An anchor of stability that’s been pegged for over three decades to the dollar, the riyal becomes more a straitjacket when oil prices go bust.
“A flexible exchange rate puts Russia at an advantage versus other commodity exporters at times of oil-price swings,” said Elina Ribakova, deputy chief economist at the Institute of International Finance. “Saudi Arabia has its hands tied.”
The disintegration of the production pact between OPEC and Russia last week jolted the oil market and turned the spotlight on the finances of commodity producers. Saudi Arabia escalated a price war with a move to flood the market with crude, taking advantage of its ability to drop prices and grab m
If the oil face-off between President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman turns on who has a stiffer fiscal backbone, it’s the ruble that could help carry Russia to the finish line.
Saudi Arabia may boast the lowest extraction costs and more spare capacity, but it has little to counter Russia’s shock-absorber in its floating currency. An anchor of stability that’s been pegged for over three decades to the dollar, the riyal becomes more a straitjacket when oil prices go bust.
“A flexible exchange rate puts Russia at an advantage versus other commodity exporters at times of oil-price swings,” said Elina Ribakova, deputy chief economist at the Institute of International Finance. “Saudi Arabia has its hands tied.”
The disintegration of the production pact between OPEC and Russia last week jolted the oil market and turned the spotlight on the finances of commodity producers. Saudi Arabia escalated a price war with a move to flood the market with crude, taking advantage of its ability to drop prices and grab m
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