The Weakening of the Ruble and the Expected Blow to the Russian Economy Will Affect Our Economy

Economist Andranik Tevanyan has made a post on his Facebook page addressing the sharp fluctuations in global oil prices, which, according to the expert, are usually associated with sharp political fluctuations.

“Today, this sharp fluctuation has been recorded. The price of Brent crude oil has dropped by $14 per barrel. The reason is that OPEC member countries have failed to reach a consensus on reducing oil production. This means that the supply volume will be large, which, according to market laws, has led to a price decline. Futures contracts are being concluded with the calculation that the price will fall, which in turn brings about a certain panic and further price declines.

As a result of the decline in oil prices, for example, the ruble has depreciated against the dollar and the euro. Russia can lose between $100 to $150 million daily due to such a sharp drop in oil prices. It is anticipated that the price of oil could drop to as low as $20 per barrel.

The weakening of the Russian ruble and the impacts on the Russian economy will affect our economy primarily because private remittances, or in simpler terms, the money sent by migrants, mainly come from Russia. The price of oil should interest us in another aspect as well. Oil-rich Azerbaijan will suffer due to the sharp drop in prices, but this should not be a reason for us to relax or celebrate. Quite the opposite, Azerbaijan, dependent on oil, could become more aggressive as a result of the price decline. Therefore, vigilance should be increased.

Thus, we are entering a new phase of global turbulence, also considering the COVID-19 factor. The virus, by the way, could disrupt tourism, air transport, fuel, food, and other markets to such an extent that the 2008-2009 international financial crisis would seem like a minor shock,” Tevanyan wrote.