Posted by
Peter Helmut Voigt
Labels:
Matt Ward
(Written by Matt Ward)
There is a perfect economic storm rising in Russia.
Seventy percent of the Russian economy is dependent upon
oil. In order for the Russian economy to break even they need to be able to
sell oil at $109 per barrel. Right now the price is $59 per barrel. Despite
Putin recently winning: Russian Man of the Year for the 15th straight year,
he is in big trouble.
The one major failing of Putin since he came to power is
that he promised the Russian people he would diversify the Russian economy and
wean them off their over reliance on oil. He has failed to do so and this
failure is now coming back to haunt him.
Now, because of competition between OPEC oil producers in
the Middle East and the United States over American Shale production, OPEC has increased
the amount of oil produced each day and reduced the price of the oil
per barrel. Their intention is to flood the oil market with really cheap oil
and therefore kill off the U.S. shale market, which has considerably higher
costs per barrel in terms of production. This has crushed the Russian oil price
index.