trending Market Intelligence /marketintelligence/en/news-insights/trending/616yQ6Y9U5ZbktM-nN6-Fg2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

In this list

Russia less sensitive but still vulnerable to low oil prices

客户案例:跨国公用事业公司有效增强对新客户信用风险的认知

S&P podcast - Coronavirus pandemic, oil price crash shake up energy sector

Case Study: A Utility Company Efficiently Sharpens Its Focus on the Credit Risk of New Customers

Energy Evolution Podcast

Energy Evolution Why solar energy could get even cheaper


Russia less sensitive but still vulnerable to low oil prices

The sensitivity of Russian government finances and that of the broader Russian economy to oil prices has diminished, but they still remain vulnerable to a sustained oil market weakness, according to a March 14 S&P Global Ratings report.

The analysts wrote that oil prices have historically been a major driver of Russia's business cycle, noting exports of crude oil and oil products accounted for 46% of goods exported from the country in 2018, while natural gas exports accounted for another 12% to comprise a total of about 16% of Russian GDP.

The analysts wrote that past Russian efforts to use windfall oil revenues to pay down debt and build up assets in oil funds "were an important factor behind our upgrade of the Russian sovereign to investment grade in early 2005 — only four years after [the] country had emerged from a sovereign default. However, previous fiscal frameworks did not succeed in avoiding procyclical fiscal policies and insulating the economy from oil price swings."

The government's current fiscal framework targets a primary budget deficit of 0.5% of GDP, calculated at a benchmark oil price of US$40 per barrel in 2017 dollars, which increases 2% each year. The government uses windfall revenue above the benchmark oil price to purchase foreign exchange for accumulation in the state's National Welfare Fund.

"Russia is more resilient to external shocks than three to four years ago: The economy's net external asset position is large, the ruble exchange rate is floating, and the government's balance sheet is strong," the analysts wrote, noting that S&P Global Ratings increased Russia's sovereign debt to BBB- in February 2018. "Although the existing economic policy framework should allow Russia to absorb future term-of-trade shocks, a fall in oil prices for an extended period below $40 a barrel will likely lead to a sizeable depreciation in exchange rates, a spike in inflation, and weaker business confidence, which will weigh on growth and public finances. If not addressed by an adequate policy response, which would most likely imply additional fiscal adjustment, this will likely pressure sovereign creditworthiness."

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.