Page 22 - RusRPTSept23

Expect ongoing volatility for years as global LNG supply and demand remain finely balanced until at least 2026, when major new export facilities come into operation. Consequently, any potential supply risk, no matter how remote, could trigger price spikes.
And just as prices can soar, they can plummet just as rapidly. European gas inventories currently stand at 90% capacity, well ahead of the November 1 target. This situation implies the region might face a temporary glut until cold winter weather reduces stockpiles.
The gas market is set to maintain its roller coaster-like appearance in the foreseeable future.
2.7 Falling current account surplus drives ruble lower
The ruble’s exchange rate in August reached its lowest reading against the US dollar since spring 2022, the Bank of Finland institute for Emerging Economies (BOFIT) said in a weekly update.
The official ruble-dollar exchange rate this week crept above 100, making the ruble worth less than one US cent. The ruble has lost about 40% of its value since last August.
To quell inflationary pressures caused by the ruble’s dramatic slide and constraints on domestic demand, the Central Bank of Russia raised its key rate by 350 basis points at an unscheduled meeting on August 15. The key rate currently stands at 12%. Media reports claim that reinstatement of various currency controls in Russia is under discussion.
The ruble’s vanishing value mainly signals the end to an episode of exceptionally high current account surpluses. The preliminary CBR estimate is that the current account surplus for January-July this year was just 25bn dollars, or 85% less than in the same seven-month period last year. A BOFIT blog post (in Finnish) this week deals specifically with the implications of Russia’s growing imbalances.
Russia’s export earnings in the first half shrank considerably from last year’s record highs. According to preliminary CBR figures, the value of goods exports in January-June was a third less than a year earlier. Export revenues were hurt most by lower prices due to global market developments and sanctions on Russian exports. The volume of Russian natural gas exports has also contracted sharply with Russia’s decision to cease supplying pipeline natural gas to many EU countries. The value of goods exports is nowhere near the historical lows of the past decade, but hovering around the same level as in the first half of 2019.
The International Energy Agency (IEA) estimates that the average price of Urals blend crude oil was 48 dollars a barrel in January-June, or about 40% less than a year earlier. The volume of Russian crude oil exports in the first half shrank by about 4% y/y. The combined volume of exports of crude oil and
RUSSIA Country Report September 2023 www.intellinews.com