Yea the lower price is for sure effecting them and the price of oil has been in the danger zone for some mid east kingdoms as well, but smartly they have built up large foreign exchange reserves to finance any set back. OPEC and foreign oil producing countries decided instead of cutting back on the amount of barrels produced a day even though the factors for high demand were going away (US involved conflicts in Mid East, Libya unrest, high demand from China, and etc) they decided to still produce at a current high rate. They did this knowing that the price of oil would fall and they could have a price war with the US and Canada two countries who's recent energy boom has begun the drop in energy prices.
The reason they have allowed prices to drop so low by not cutting back on production is two fold. 1 is they don't give up any market share and 2 is at these low of prices it is soon gonna be be unprofitable for US shale and Canadian tar sands oil companies to keep producing and drive them out of business.
So for now countries like Russia and OPEC nations will continue to weather the pain until they see some US and Canadian falter. Then simply begin to use and sell off the large amounts of US dollars they have bought and held in FOREX reserve removing them from the global economy and driving the value of the dollar up.
So my guess is at some point next year in this current oil war, prices will go back up either by the west producing less or after some western companies close their doors ya see the market begin to be flooded by more US dollars. So for me personally I am enjoying lower energy prices while looking at oil refining and drilling companies that are a deep discount right now and will profit heavily when oil prices go back up in the near future.
So Russia is taking it on the chin right now, but if the current war goes the way they plan less western production and competition they will be alright as long as they have no unrest during this period. I think Russia will survive as in the history of the world few nations have had to survive the harshness the Russian people have had to.
They are a resilient people but losing over half the value of your cash reserves and monthly income will have an impact on a people who have generationally started to become accustomed to modern conveniences.
With investment money stampeding out of Russia and interest rates at 17%, even those jobs are at risk. Then you have industries that are reeling from the sanctions and others that will profit from it but it's mostly a negative. The Russian GDP has dropped from 8th to 13th since the sanctions began, falling behind Canada and Australia and even with Spain. I don't see how it doesn't continue to drop unless BRICS gets involved in a big way, but that would be catching the falling knife, or the EU capitulates or compromises.
I have read that most US shale drilling can survive at $40 a barrel so, not sure how realistic it is to expect a rise in oil prices soon unless the price continues to plummet first and stays low for an extended period. Also, suspending shale oil drilling doesn't mean they won't start right back up when the prices rise. That infrastructure doesn't go away and investors will be sitting there waiting to lap up the assets at a deep discount. This may be a new paradigm for awhile.
The ruble plummet is a self-feeding system. The more value it loses, the more people who get out of the ruble, the more value it loses. Russia has made bold moves to stop the plummet with no effect.
If Russia stays in Crimea, and they will, sanctions may hold for a long long time. If they continue to make aggressive moves towards their neighbors, it could get even uglier.
I don't see Putin giving ground on anything. It's not in his nature. I see him as becoming more aggressive the more Russia is hurt. Who shows up at an economic summit with navy ships?
