Russian Oil Producers Care More About Rubles Than Barrels
- About 90% of every $1 increase in oil goes to government
- Ruble’s 12% advance this year has increased company costs
What Happened to the Oil Rally?
This article is for subscribers only.
For Russian oil companies, the value of the ruble matters more than the price of a barrel.
While OPEC celebrates the rebound in crude, Rosneft OJSC and Lukoil PJSC must keep one eye on the stronger Russian currency. That’s because the ruble’s 12 percent gain this year against the dollar transmits more directly to earnings than the oil-price windfall, which largely ends up swelling the Kremlin’s coffers, according to Ildar Davletshin, an analyst at Renaissance Capital.