The Russian Rouble and the story of the rock drill
The oil price needs to attain a new height in the context of any recession that might happen in non-OPEC countries like Kenya, Libya, Ukraine and Russia. A price of 53-65 USD per barrel for Brent Crude would be good enough to sustain an economy without any kind of fiscal slippage. Other non-oil producing countries are in a dilemma as to what would be a good importing price for a barrel of Brent Crude.
Russian economy depends largely on oil and upstream. There are some oil fields in Siberia, which needs to be cut through the rocks to create an upstream. Some food for thought is-
- Russia would like to raise ‘oil-bonds’ in the future as an oil currency. These bonds would ensure a smooth transition of downstream currency, to hedge against the future and future explorations.
- The oil equilibrium price is around 42-45 USD per barrel. So, if the Russian Crude Index slides below that, it can have a major impact on the global economy.
- Focusing on domestic and internal savings by following the head of OPEC Saudi Arabia which can create a tax breaks and alternate investments, Russia cannot play the roulette once again.
- Hedging against the volatility of oil would not create any further furore, as almost all the non-oil producing countries would like to exchange trade with these oil bonds also known as the black gold currency.
- How does the economy get affected with the oil sensitivity index which essentially collates with the sensitivity against the oil exploration and upstream. Rich oil producing countries can create this against the backdoor of their own sustained economy.
- Government bonds that are fixed at a smaller percentage against any default that can create an investment in Rouble. The Rouble traded Russian stock market index MICEX needs to grow further after international trade barriers are lifted.
- Russia needs an attention to immediate structural reforms in their country. By structural reforms, it means an overall approach to the requirements of a new Rouble economy, with a required resolution to their immediate problems.
- Politically, all the economies which are strong in oil and were a part of the USSR before, can create a common oil platform to trade together in the Rouble currency.
- How can the ECB help to create a common market for united Russia and allow almost zero interest loans, including funding for certain development projects from the World Bank to create more entrepreneurship is the step ahead.
- Rouble needs to invest in other countries for swelling internal dollar reserves by pumping blood in the Russian economy. Any immediate meltdown is practically ruled out at any time.