The ex-Ministry of Finance of Russia, Alexei Kudrin, now chairman of the board at the Center for Strategic Research Foundation (CSR) in a recent interview said that the recent sell-off in crude oil prices is “too tough.” Alexei Kudrin also believes the Russian state owned oil companies should be privatized in the coming years in order to help boost the Russian economy.
"The oil sector should be fully privatized in the next seven to eight years, no state companies are required there now as the statehood brings more harm than benefit to those companies," Alexei Kudrin, said at the St Petersburg International Economic Forum – citing CNBC
Under normal circumstances the Ruble exchange rate correlates with the Oil price because Rusia is depending on energy revenues to propel its economic growth. During the last trading week of May the Russian rouble has plunged to 55.164 a level not seen since July 2015. The Russian ruble exchange rate has been driven lower by the recent slump in the energy sector. The Crude Oil prices broke below the $50 per barrel, which is a big psychological figure for the oil prices.
Further negative developments in the energy sector will continue to drive the Ruble exchange rate lower in the medium-term. When oil prices sell-off, the Russian ruble usually follows but for the oil bearish momentum to really get traction again we need a break below the $45 mark.
The OPEC deal to cut crude oil output is also tested by the recent developments around Qatar diplomatic crisis. The OPEC deal is also put in jeopardy by the rise in US crude oil production, which is expected to hit a record 10 million bpd in 2018. These uncertainties could drive the Crude oil price lower and subsequently the Russian ruble can follow the Oil lead and drop even further.