Friday, December 19, 2008

Drill: World Bank: Russia may need help if oil falls more

We need to get it drilled into our heads,

the drill is,

we need to drill more, and drill now,

and if we do,

then we will drill tyrants like Putin, Ahmadinejad, and King Abdullah into the ground.


MOSCOW (AP) - Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday.

The bleak scenario would mark a rapid unraveling of Russia's oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.

"If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy," Zeljko Bogetic, the World Bank's chief economist in Russia told investors on Friday. "The pressures on the current account and public finances in Russia would quickly rise to a point where the financing constraint would become so sharp that it's possible even to envisage Russia's return from a creditor to international organisations to (that of) a borrower."

At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, but would not face a "meltdown" scenario, said Bogetic.

Oil prices took a sharp turn downward this week, with the February light sweet crude contract trading just over $42 a barrel—more than $100 lower than its July peak—despite a large output cut pledged this week by oil producers' cartel OPEC.

Some major oil-importing countries have criticized OPEC's move to push up prices during a global slowdown.

The World Bank currently forecasts an average oil price of $75 a barrel over the next two years, said Bogetic.

Among emerging markets, Russia has been one of the hardest hit by the global financial crisis and plunging oil prices, the mainstay of the Russian economy. These factors have put the national currency under intense strain and triggered massive stock market losses and capital outflows from the country.

Russia, which grew at over 8 percent last year, is facing a severe slowdown in growth, and possibly even recession next year, analysts say. Torrid figures released earlier this week showed that industrial output had plunged 10.8 percent in November from the previous month, signaling a dramatic slowdown in the final quarter.


8 comments:

Always On Watch said...

I hope to God that our leaders and the people of the United States remember the price drive-up of oil earlier this year. This extortion had a devastating effect on our economy, including greatly impacting the price of food (Everybody eats). I also believe that the soaring price of oil helped to elect BHO.

Always On Watch said...

Another thought: Perhaps the lowered price of oil is somewhat akin to subprime mortgages. In other words, the Achilles heel of many countries' economies. Those countries seemed to have assumed that that price rise of oil would go on forever.

midnight rider said...

AOW, I remember reading somewhere (nope, haevn't a clue where) back in late spring that oil would continue to rise and stay high until about the time of the election. And about then it would precipitously drop. As happened. Wish I could remember where I saw that. Anyone else remember seeing this?

Anonymous said...

HA HA HA HA HA HA HA
On a lighter note, Iran needs at least $90 per barrel to break even although even for them the drop in prices have a small benefit, all oil dealing depend on the cost of crude, expense and margin.80% of Iranian gasoline is imported, they have hardly any refining capacity.

Pastorius said...

Good point, Ciccio. I wasn't aware of that problem. I knew Iran didn't have refining capacity, but I wasn't aware they needed the price of oil to be so high.

Pastorius said...

MR,
Here's a little something to chew over, if you really want to get paranoid:

http://www.google.com/search?hl=en&q=soros+currency+manipulation&btnG=Google+Search&aq=f&oq=

Sounds like conspiracy stuff, but it is true that many supposedly reasonable people have accused Soros of having had a hand in the fall of the Yen in the 90's:

http://www.aim.org/special-report/the-hidden-soros-agenda-drugs-money-the-media-and-political-power/

Soros, we're told, is a "philanthropist" committed to "democracy." The Republican Party, by contrast, is supposed to be run by fat cats and Big Business, such as those at Halliburton.

Soros may be the biggest political fat cat of all time. Convicted in France of insider trading, Soros specializes in weakening or collapsing the currencies of entire nations for his own selfish interests. He is known as the man who broke the Bank of England. His power is such that his statements alone can cause currencies to go up or down. Other people suffer so he can get rich. But journalists don't want to examine the questionable means by which he achieved his wealth because they share his goal of electing Kerry and the Democrats. Curiously, once he made his fortune he became a global socialist, endorsing global taxes on the very means he employed to get rich – international currency speculation and manipulation.

The media consistently ignore the fact that this so-called "philanthropist" has had several brushes with the law as he has laid siege to national economies and currencies. Hard-working U.S. businessmen understand how Soros has made his money. In protesting a Soros appearance hosted by the University of Toledo, Edwin J. Nagle III, president and CEO of the Nagle Companies, highlighted "the immoral and unethical means by which he achieved his wealth." He added, "I certainly didn't see included in his bio the stories on how he collapsed whole country's currencies for his own self interests so that many may suffer."

Here, Soros signed a consent decree in United States District Court, in a Securities and Exchange Commission case involving stock manipulation, and was fined $75,000 by the Commodity Futures Trading Commission for holding positions "in excess of speculative limits." Stories about Soros rarely, if ever, mention any of his legal problems.

etc.

Always On Watch said...

MR,
I saw that same info too.

You might be able to find it by Googling "price of oil + election"

Without the quotes first.

midnight rider said...

Good evening Pastorius good sir. Paranoia is my specialty. You have to be paranoid just to survive fighting the freaks we have to deal with.

And Soros is a freak. To me his biggest crime is, being Jewish himself, he's an anti-semite. Hid his jewish heritage in WW II (many did or tried to). He'd rather see us deal with Hamas than uphold Israel. And he may have helped identify Jews trying to escape the Nazis. I've read pieces that stated he admitted it.

Problem is, like you said, not much out there. Just bits and pieces you remember reading somewhere although Atlas has been relentless in attacking Soros. As has Jihad & Dhimmiwatch.

Then there is his king making, though that didn't work out so well for Kerry, it certainly did for Barry O.

And what was his hand in the mess we're in? Funding groups like moveon.org and ACORN who lobbied for those stupid subprime mortgages? And has he &/or surrogates been shorting or otherwise manipulating to help drive our current markets into fits? The 99th richest man in the world would certainly have the wherewithall to at least attempt it.

You're correct. Gyorgy Schwartz is reason enough for anyone to be paranoid.

AoW -- I tried the googling but ran out of time. I'll get back to it. I was more looking to see how much of it was coincidence or not. I'm happy at least someone else saw it, though. Coincidence or not I don't think anyone thought the drop would be as precipitous as it has been.