Vladimir Putin made another address to the nation, the essence of which is that decisions on specific measures to combat the coronavirus epidemic will now be made locally. Nothing was said about economic support measures, which could have been expected from the government. And this is easily explained.
This week it became known that the established price of oil on the world markets at $13 per barrel means negative profitability for Russian producers and suppliers. If on March 30 they were trading at a loss of 1007 roubles per ton, on April 1 they were trading at a loss of 1200 roubles per ton.
Moreover, while the losses of most economies today are caused by a force majeure and a cause independent of governments, such as the coronavirus epidemic, the destruction of the foundation of the Russian economy, which is oil, is explained by a war that «Rosneft», led by Putin’s friend Igor Sechin, decided to declare on Saudi Arabia and the OPEC-led coalition by withdrawing from the agreement with them.
Such a decision, imposed by one company, shocked other Russian oil producers and suppliers, including «Lukoil», as well as the majority of oil market experts, who point out that it is a form of self-destruction. However, Sechin is used to it — as the joke goes, the fact that he joined the Communist Party in 1990, when all reasonable people were leaving it, speaks volumes about his analytical abilities. That’s the story with Venezuela, from whose market «Rosneft» suffered losses last week. It is the same story — after all, they also entered this market when its economy was on the verge of bankruptcy.
So now the main hope of the Kremlin’s strategic geniuses is that they will manage to reach an agreement with Saudi Arabia again. And also on Donald Trump, who can contribute to this. Recently, he said that Saudi Arabia and Russia «will figure something out in the next few days,» because what is happening on the world markets «is very bad for Russia and very bad for Saudi Arabia.»
But as they say, «what’s good for the Russian is death for the German,» and in this case it is the opposite — what is bad for the leading oil exporters Russia and Saudi Arabia is great for the US as an oil importer. And is it really so bad for Saudi Arabia?
For example, the Saudi oil company «Saudi Aramco» announced that it intends to acquire new equipment and personnel that will allow it to increase production to 12 million barrels per day, using all the possibilities for «Rosneft» to increase production. This means that if the Saudis are going to negotiate, it will be only on their terms, forcing the Kremlin’s «clever strategists» into a complete and unconditional surrender in the oil war, which Donald Trump will help them to sign.
Is it surprising that in such conditions the Russian business and population have nothing to offer the Kremlin?