Page 64 - BNE_magazine_05_2020

64 Opinion
Meanwhile, Oleg Deripaska’s Volnoe Delo Foundation,
together with Moscow State University, has launched an online portal, which allows practitioners to learn best practices in the treatment of viral pneumonia and to receive individual advice from Russia’s leading specialists. The Foundation has also donated fully-equipped ambulances and personal protection equipment to 12 Russian regions, and produced a series of videos for the general public, where doctors and scientists answer questions about coronavirus.
When it comes to communicating crisis measures to stakeholders, speed and brevity are key. The advice to corporates is to stay open and transparent, according to Andrey Braginskiy, Managing Director of Communications at the Moscow Exchange (MOEX), who spoke at a recent discussion on business in the time of coronavirus hosted by
MOSCOW BLOG:
Russia caught out by oil plunge
bne May 2020
EM. But investors are now looking for quick updates on how the situation is impacting operations, so communications should become more frequent and arrive in more bite-size forms. For its own part, MOEX is focused on continuity of operations, ensuring the safety of those attending offices (about 10% of the total workforce), and organizing productive work environments for others working remotely.
As employees, investors and communities seek support and reassurance amid the current crisis, a number of Russian businesses have stepped up to the challenge by introducing effective ways to safeguard the health of their employees while remaining engaged and responsive to the needs of their stakeholders. But the scale of the challenge is only going to increase in the coming months, and so we will be watching this space.
Russia pulled out of the OPEC+ production cut deal on March 6, setting off a collapse of prices that ran out of control.
The price of a barrel of Urals blend subsequently recovered to $24.55 in the next few weeks, but now there is a lot of confusion over how much a barrel costs. Part of the problem is that while Urals futures can be traded on the St Petersburg international commodity exchange, there are in fact no deals and so no pricing mechanism for futures. The only market
is a spot market, but here too the information on the prices used in deals is not transparent. There have been reports that the price of Urals fell into negative territory again to -$3 and other reports that say the price is somewhere around $17 –
“Demand for oil in April and May could be down by as much as
20 or 30 per cent, while the overall decline in 2020 will be 5–7 per cent”
Ben Aris in Berlin
Did Russian President Vladimir Putin just screw up in a spectacular fashion? Russia pulled out of the OPEC+ production cut deal on March 6, baulking at increasing its cut from 300,000 barrels a day to support prices to 500,000 bpd under the terms of that deal. Many said at the time that the decision was made on purpose to cause the price of oil to fall and so destroy the US shale oil industry that needs prices of oil to be at least $40 per barrel to be economically viable.
The problem is the plan worked too well. First the Saudis flooded European refineries with crude at a steep $8 discount. That effectively locked Russian producers out of the their traditional export market and the price of the Russian Urals blend of oil, which normally trades at a roughly $2 discount
to the benchmark Brent blend, collapsed completely, briefly going negative a full two weeks before the same thing happened to the US WTI blend, where prices fell to below zero on April 20 for the first time in history due to the lack
of storage space for May contracts.
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