Russia’s oil producers are enjoying near record crude prices in rubles, their best start to the year since 2015. As the nation prepares to discuss its deal with Opec allies in Oman this weekend, analysts say the good times will continue.
For the global market, Brent is still $50 below the high of 2014, yet for Russian producers the price of the benchmark crude in rubles is close to a record thanks to a weaker currency. A new government programme of foreign-currency purchases is expected to limit the upward potential for the ruble this year, and in the coming weeks even trigger its temporary weakness, analysts at UBS Group said in a January 11 report.
While the nation’s finance minister Anton Siluanov said this week that Russia won’t allow the exchange rate to strengthen too sharply, central bank governor Elvira Nabiullina warned against “euphoria” from high oil prices.
Russia’s oil and gas index may gain another 20 to 30 per cent this year as investors have yet to price in Brent at US$70 per barrel, according to Sberbank CIB. "The sell side is assuming an average oil price of $55 per barrel for 2018,” the bank’s analysts said in a January 15 note. "Should the oil price stay at the current level, we will see a wave of earnings upgrades.”
The appeal of Russian oil and gas shares has increased, relative to European rivals, since the beginning of the year. Citigroup said 2018 is set to become the second “year of the dividend” for Russian stocks amid improved earnings outlooks.
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Read more:
No need to panic over $70 oil price: UAE Energy Minister
Oil rises above $70 on Opec calls to keep cuts in place
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While an investor favorite, Russia’s oil and gas industry still faces the risk of headwinds. The first may blow at the end of January, should the US Treasury publish a report on potential new sanctions against Russia. However, the risk of a tougher stance on the Russian economy and companies is low, according to a Bank of America Merrill Lynch report.
Other potential risks include oil and ruble volatility, plus the imposition of a higher tax burden on Russian producers, according to Citigroup. The fiscal threat may materialise after presidential elections in March as the Kremlin mulls boosting spending on health, education and infrastructure. The energy industry is the traditional cash cow for such budget splurges.
Russian producers are also less well placed than their Arabian Gulf allies to take advantage of a gradual exit from the oil output curbs agreed with the Organisation of Petroleum Exporting Countries. The nation’s spare production capacity doesn’t compare to that of Opec, according to analysts at Aton in Moscow and Rystad Energy in Oslo.
The US Energy Information Administration estimates that Opec's spare capacity -- production that can be brought online within 30 days and sustained for at least 90 days -- stood at 2.11 million barrels a day in the fourth quarter, all in the Middle East. The International Energy Agency had a higher figure -- 3.41 million barrels a day as of November.
Russia, which agreed to cut production to 10.95 million barrels from a post-Soviet high of 11.25 million barrels in October 2016, has less immediate firepower at its disposal.
Russia could increase output to about 11.1 million barrels a day within a month of the curbs being lifted and ramp up production to pre-cut levels within an additional two to three months, said Rystad analyst Veronika Akulinitseva. BMI Research has a similar estimate -- some 310,000 barrels a day that could be brought to the market within six months.
To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Rakteem Katakey
©2018 Bloomberg L.P.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
BELGIUM%20SQUAD
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More from Rashmee Roshan Lall
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
SHALASH%20THE%20IRAQI
%3Cp%3EAuthor%3A%20Shalash%3Cbr%3ETranslator%3A%20Luke%20Leafgren%3Cbr%3EPages%3A%20352%3Cbr%3EPublisher%3A%20And%20Other%20Stories%3C%2Fp%3E%0A
if you go
The flights
Emirates fly direct from Dubai to Houston, Texas, where United have direct flights to Managua. Alternatively, from October, Iberia will offer connections from Madrid, which can be reached by both Etihad from Abu Dhabi and Emirates from Dubai.
The trip
Geodyssey’s (Geodyssey.co.uk) 15-night Nicaragua Odyssey visits the colonial cities of Leon and Granada, lively country villages, the lake island of Ometepe and a stunning array of landscapes, with wildlife, history, creative crafts and more. From Dh18,500 per person, based on two sharing, including transfers and tours but excluding international flights. For more information, visit visitnicaragua.us.
Pari
Produced by: Clean Slate Films (Anushka Sharma, Karnesh Sharma) & KriArj Entertainment
Director: Prosit Roy
Starring: Anushka Sharma, Parambrata Chattopadhyay, Ritabhari Chakraborty, Rajat Kapoor, Mansi Multani
Three stars
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
Call of Duty: Black Ops 6
Developer: Treyarch, Raven Software
Publisher: Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5
SPECS
Nissan 370z Nismo
Engine: 3.7-litre V6
Transmission: seven-speed automatic
Power: 363hp
Torque: 560Nm
Price: Dh184,500
