Archives for November 2014

Russian Economic Development Minister Alexey Ulyukaev (AFP Photo/Thierry Charlier)

The current oil price – about $70 per barrel – is acceptable for Russia and will not cause internal crisis, Aleksey Ulyukayev, minister of economic development, says. The price that matters for the budget is in rubles, which is balanced by currency rates.

Speaking to Channel One, Ulyukayev said the slump in oil price, which followed a decision by OPEC countries not to cut production, will not affect the Russian economy and people’s lives very much.

“The budget will be run, and run well, it will even get surplus,” the minister said. “Generally, the financial system will be quite comfortable.”

READ MORE: Low oil prices OK for Russian economy due to currency rates – minister

Ulyukayev explained that the oil price in rubles is formed by two factors: the market price and currency rates. A hike in the dollar’s value has balanced off the “real” oil price for Russia, making it nearly the same 3,600 rubles per barrel it used to be earlier.

According to the minister, not only will the government fulfill its social obligations, it will even have a budget surplus under the new circumstances. All expenditures in the Russian budget are calculated in rubles.

Ulyukayev predicted that both the demand for oil and the price will rise in winter. According to the minister, the market will try to find a balance and the price will become stable.

“The market is searching for the balance, and I think it will be searching for it for some time,” he said, adding that the current oil price looks understated and that the more realistic one is about $90 per barrel.

The sharp plunge of the ruble over the week caused anxiety over expenses in the social sphere, and a rising demand for foreign currency. However, Ulyukayev advised the population to stay calm and keep their money in rubles, not rushing to save dollars or euros for a rainy day if one does not need them in the near future. According to him, a mass-scale currency conversion would only enrich banks, not the population.

As for the budget payments, the minister pledged they will be fulfilled “in full extent.” Pensions will be augmented in accordance with the inflation rate, and the Russian government also has additional reserve funds to cover all necessary expenses, he said.

However, the current situation will cause a revision of the rate of economic growth – but “all these adjustments will be within the range of decimal of percent of GDP,” the minister estimated.

Article source: http://rt.com/business/210075-russia-minister-economy-interview/

First Deputy Prime Minister Igor Shuvalov (RIA Novosti / Sergey Subbotin)

Russia is to stay in line with OPEC’s decision not to cut oil production, said the country’s First Deputy PM, adding the move serves to secure the country’s position on the market and protect the budget.

“The experts say that one of the main reasons behind the falling oil prices is that some Arab oil producing countries… are squeezing out shale oil from the international market,” Igor Shuvalov told Rossiya-1 TV Saturday.

“If such actions are happening with the aim to fix or confirm one’s position on the market, we should not do anything at the moment to scale down our positions.”

The US is seeing a peak in shale oil market production, which has drastically affected the global oil market dampening prices. Shuvalov admitted that falling costs have dragged the ruble down to a degree it cannot be ignored.

“The decision of Russia’s Central Bank to turn to a floating course for the ruble and plunging oil prices is a serious challenge to us,” he said, explaining the reason why Moscow followed the recent OPEC meeting closely.

“We should protect our own interests, not the interests of all the major oil producers who are part of this bloc,” Shuvalov said. “And at the moment Russia is not interested in reducing oil extraction.”

Moscow understood that the Organization of the Petroleum Exporting Countries would not take a decision to cut crude production, so chose not to press anyone into it.

“We neither pushed for this decision, nor advised it,” he remarked, adding that OPEC’s decision protects the interests of Russia’s oil companies as well as the state budget.

READ MORE: Brent crude drops below $70 for first time in 4 yrs, ruble in new historic plunge

Russia’s minister hopes that crude prices will rise in the nearest future as a tough winter is coming and countries will need more energy.

On Thursday, OPEC took a ‘unilateral decision’ to cut production and to leave the daily output ceiling unchanged at 30 million barrels, despite a major oversupply that has caused oil prices to fall more than 30 percent.

Following OPEC’s decision, Brent Crude plunged, falling below $70 per barrel, while crude dropped to $66 per barrel.

The Russian ruble also slumped back after the OPEC made its decision. During the week the currency had been making attempts to recover. The ruble went down to 49.32 against the dollar on Saturday; the ruble’s rate to the euro has hit 61.41.

On Friday, Russian Economic Development Minister Aleksey Ulyukaev said that low oil prices will not ruin the economy. He added that the oil price estimate for the 2015 budget has been slashed to $80 a barrel from $100 a barrel.

READ MORE: Russian markets ruble hit new lows, as OPEC oil decision weighs

Playing politics is a big part of OPEC, and US shale success is a problem for Gulf-producing nations, the executive director of DV Advisors, Patrick Young, told RT.

“There are all sorts of politics involved. OPEC never misses a trick to play politics,” Young said. “There is an issue with America. The problem with America is that it is producing more and more oil at the moment and actually if OPEC as a cartel simply cut the amount of oil it produces, American shale would fill the gap.”

Article source: http://rt.com/business/210015-russia-oil-opec-stable/

AFP Photo/Karen Bleier

Tags

Currencies, Iran, Markets, Oil, Prices, Russia, Russia and the global economy, Saudi Arabia, South America, USA, Venezuela

Brent crude oil slumped to below $70 on Friday, its lowest level since 2010, after OPEC decided not to cut oil production. Venezuela’s Foreign Minister said the group had worse cases to handle, adding that the current slump has partly political grounds.

The price of the crude oil dipped 3.7 percent on Friday and fell to $69.94 per barrel, according to auction results. The cost of January futures fell by 4.47 percent, to $66.07 per barrel.

In turn, the ruble hit new lows against the dollar, going down to $50.01 on Friday night at the close of the Moscow Stock Exchange.

This follows the decision made by the 12 members of the Organization of the Petroleum Exporting Countries (OPEC) on Thursday, to keep daily oil output at 30 million barrels. The step was taken despite a major oversupply that has caused oil prices to fall more than 30 percent.

Crude oil at $66. This is getting interesting…

— Rick Falkvinge (@Falkvinge) November 29, 2014

RT Spanish spoke with Venezuela’s Foreign Minister Rafael Ramírez and asked him to comment on the developments. Venezuela is one of the worst hit countries in the current oil price slump.

“OPEC is a mature organization that has already faced different situations, perhaps even more complex than this one. Today we had a fairly long discussion of all factors that influenced that market and on the basis of a general consensus we’ve made a decision, which is the first step towards the stabilization of the market,” Ramírez told RT.

He reminded that 30 million barrels per day has been the OPEC’s oil production ceiling since December 2011.

“But now we have an overproduction, which, according to rough estimates, is 1.5 million barrels,” he said, adding that the Thursday decision will move the overproduction from the market, and the 12 members will monitor the market’s reaction.

READ MORE: Oil slumps 4% as OPEC leaves output unchanged

“The market situation is difficult,” Ramírez elaborated. “The demand for raw materials is kept at a low level, especially amid the economic crisis in Europe and the United States…At the same time, production is constantly increasing, especially due to shale [oil production] in the US.”

“Combined with geopolitics, as well as the desire to impose sanctions on Russia, and sanctions against Iran – all that influenced the fact that oil prices have fallen,” he said.

Ramírez stressed the importance of following the unilaterally taken Thursday decision. He said the price, which has been at $100 per barrel for quite a long time, has shown that it is a “fair price for both producers and consumers.”

At lower values, players with higher production price will leave the market, as well as new projects, and developing ones will be closed, he explained, adding that the countries-producers will need more funds to increase the capacity to cover the needs of the market.

Ramírez warned those putting stakes on speculation, saying that OPEC has tools to predict the market’s behavior.

The foreign minister stressed the importance of cooperating with non-OPEC member countries. He reminded of the Tuesday meeting held between Russia, Saudi Arabia, Mexico, and Venezuela, which was held in such a format for the first time in 11 years.

“Such meetings are very important because besides the fact that we share our opinions, we preserve the mechanisms of cooperation and together observe how the market reacts to them.”

READ MORE: Venezuelan president resolved to return oil to $100 a barrel

In 2008, OPEC had to face a sharp fall of oil prices, which slumped from $140 per barrel to as low as $35 in six months. According to Ramírez, it took a whole year for prices to recover that time, after OPEC decided to cut oil production.

Article source: http://rt.com/business/209895-brent-oil-drop-ruble/

Reuters/Charles Platiau

Russian oil major Rosneft has agreed to take over a 16.67 percent stake from France’s Total in an oil refinery in Germany. The deal was struck during the first visit to Russia of Total’s new CEO.

“This agreement reflects the level of trust and confirms the commitment of Total and Rosneft to a long-term and mutually beneficial relationship,” said the head of Rosneft Igor Sechin. “It demonstrates the efficiency of energy cooperation between Europe and Russia,” he added.

READ MORE: Russia remains key strategic partner for Total – new CEO

The meeting was attended by Russian President Vladimir Putin and representatives of the country’s largest oil corporations.

Sechin says the deal will strengthen Russia’s position in one of the most efficient European refineries, and will give Rosneft an opportunity to reach end consumers in the key European market.

After the deal was signed, Rosneft and Total will have around 55 percent of the refinery’s share capital, he said.

At a meeting with the new Total CEO Patrick Pouyanne, President Putin said he expected the oil market will likely to stabilize despite OPEC’s refusal to cut output.

“The winter is coming, and I am sure in the first quarter, in the middle of the year, the market will become balanced,” said Putin.

“We are satisfied with it as a whole,” he said adding that Moscow did not insist on any other decision.

The Russian President says a drop in oil prices after OPEC’s decision was an inevitable reaction from the market.

“It was clear to us from the very beginning that after the announcement of OPEC’s decision to retain its current output the prices would react to it and slightly fall,” said Putin.

Putin said that Russia met with OPEC representatives before Thursday’s meeting.

“None of the major energy producers insisted on any particular action for leveling prices, neither did we,” he said

“We know the oil industry and the energy sector in general are going through hard times. But I think it’s not surprising neither for us, nor for you.” he added.

Article source: http://rt.com/business/209767-rosneft-share-total-refinery/

Minister of Economic Development Alexei Ulyukayev (RIA Novosti/Dmitry Astakhov)

Low oil prices will not ruin the economy the Russian Economic Development Minister Aleksey Ulyukaev has said, adding that the oil price estimate for the 2015 budget has been slashed to $80 a barrel from $100 a barrel.

“We aren’t going to collapse,” Ulyukaev said at a meeting with ministers in Moscow Friday.

Ulyukaev’s comment comes after OPEC decided to keep its production ceiling at 30 million barrels per day. This will hurt high-cost producers such as Iran, Iraq, Venezuela, and Russia. It will also deal a big blow to US shale drillers, which aren’t profitable below $70-80 per barrel, according to some estimates.

READ MORE: Oil slumps 4% as OPEC leaves output unchanged

He said Russia will revise its break-even oil price to balance the budget for next year, but that the current oil prices won’t kill the Russian economy. In fact, $80 per barrel is still a relative high compared to 1998 when the Asian Financial crisis hit and prices were $18 per barrel, or in the early 2000s when oil hovered in the $30049 range.

READ MORE: OPEC decision will keep oil prices low hit Russia, Iran, US – experts

“It is difficult to talk about the break-even price now. It is very likely that it will be closer to $80 per barrel, but certainly now no one can say. We are preparing for different scenarios,” said Ulyukayev.

Urals crude, Russia’s key export blend, usually trades slightly lower than Brent. Russia’s current budget depends on $100 per barrel.

Russian President Vladimir Putin said he “wasn’t surprised” by the sudden drop in oil prices and that it was an unavoidable reaction to the market, during a meeting with the France’s Total President Patrick Pouyanne in Sochi Friday.

“We know that it is a tricky time for the oil industry, and the energy sector in general. But I think there are no surprises for us,” the President said, as quoted by TASS, adding that Russia was satisfied with the OPEC decision and believes that the world oil market will recover in the first or second quarter of 2015 as the winter months hit.

Igor Sechin, the chairman of the country’s biggest oil producer, Rosneft, said that Russia could even withstand prices as low as $60 per barrel. The oil chief also warned that the world oil market is about to undergo significant changes.

The world’s largest producer of crude stands to lose up to $140 billion per year as long as oil prices stay below $80 per barrel.

Bloomberg analysts say there is a 75 percent chance the Russian economy will slip into a recession in the next 12 months.

Russia risks entering a technical recession if its fourth quarter growth doesn’t expand quarter-on-quarter. A technical recession occurs after two consecutive quarters of non-growth. In the third quarter Russia’s economy contracted 0.5 percent.

Article source: http://rt.com/business/209787-russia-economy-collapse-oil/

Igor Sechin, president, chairman of the management board and deputy chairman of the board of directors at OJSC Rosneft. (RIA Novosti/Vladimir Astapkovich)

The decline in oil prices and the increase in alternative shale production in the US will trigger a redistribution of the world oil market, said Rosneft CEO Igor Sechin.

“The crisis situation creates additional possibilities. Naturally, some companies will not be able to operate in conditions of low oil prices. The crisis will trigger a redistribution of the market. Due to non-traditional production in the United States, we are on the brink of a big repartition,” the head of the world’s largest public oil corporation said in an interview with Austria’s Die Presse Thursday.

READ MORE: OPEC decision will keep oil prices low hit Russia, Iran, US – experts

Sechin says cartel-type organizations have proved ineffective and the future lies with another control model.

“It should be admitted that, regrettably, the existing structures, such as the International Energy Agency or the Energy Charter Secretariat, have failed to fulfill their functions. I think cartel-type organizations have no potential, the future belongs to a market council that is to embrace both oil producers, oil consumers and representatives of regulators,” he said.

Sechin said that oil prices had been going down for five months and doesn’t exclude the possibility of them going below $60 a barrel in the next six months, after OPEC decided to keep the current quotas.

READ MORE: Oil slumps 4% as OPEC leaves output unchanged

He added Russia may halt a number of projects and cut oil production by up to 300,000 barrels a day should oil prices continue to drop. However, he believes the falling prices won’t have a critical impact on Rosneft production.

“I would like to say that Rosneft is flexible enough and has some reserves, so a price of $60 will do as well. Of course, we will have to postpone some expensive projects,” he said.

Sechin expects the oil prices to stabilize after 2015, when production will go down due to the balance of resources.

“Production is on the rise. Practically all experts agree that in the period from 2017 to 2025 the ceiling will be reached,” he said adding that the movement of prices is spurred downwards by US shale production.

“In future reducing production will send the prices upwards,” he concluded.

Article source: http://rt.com/business/209615-sechin-oil-market-repartition/

Russian President Vladimir Putin and Turkish Prime Minister Recep Erdogan lighting the symbolic torch at the jhtning of the Blue Stream gas pipeline, passing along the Black Sea bed. (RIA Novosti/Sergey Zhukov)

The Russian President is to visit Turkey on December 1 to discuss trade and energy. His talks with Turkish President Erdogan will focus on the Blue Stream gas pipeline from Russia, as well as the building of a $20 billion nuclear power plant.

President Putin and Turkey’s President Recep Tayyip Erdogan are due to meet in Ankara on Monday.

“In recent decades, energy has been playing the role of a ‘locomotive’ in our trade and economic cooperation. In terms of volume, Turkey is the second largest buyer of Russian natural gas after Germany, which is delivered through the ‘Western corridor’ with transit through Ukraine, Moldova, Romania and Bulgaria, and through the Blue Stream gas pipeline,” Putin said in an interview to Anadolu Agency ahead of his visit to Turkey.

With a population of more than 80 million Turkey is a strategic partner for Russia as it diversifies dependence away from Europe.

In 2014, Russia will supply Turkey with 30 billion cubic meters of gas, compared to 26.7 billion cubic meters in 2013, according to Gazprom Export. The increase is to meet Turkey’s growing energy demand, especially in the winter months. According to Turkey’s energy minister, this will increase the share of Russian gas in the Turkish market to 46 percent from 43 percent.

Turkey will try and negotiate a discount for the extra 3 billion cubic meters of cubic meters of Russian gas it agreed to in October, Turkey’s Energy Minister Taner Yıldız said after holding meetings with Gazprom CEO Aleksey Miller in Moscow. Yıldız requested a discount on the extra deliveries, and said he is waiting for the Russia company’s proposal.

Russia opened the Blue Stream gas pipeline in 2002, and its capacity is set to increase from the current 16 billion cubic meters (bcm) of gas per year to 19 bcm, Putin said.

Gazprom’s Blue Stream Pipeline

Nuclear energy is also an area of energy cooperation between the two countries. Turkey relies on Russia for almost 65 percent of its energy imports.

In 2010, the two countries signed an agreement to construct the Mersin-Akkuyu nuclear power station in Turkey.

“This large-scale project, worth about $20 billion, is being implemented on schedule and will strengthen Turkey’s energy security and create new jobs, including through the involvement of Turkish companies,” Putin said.

The plant is going to be built by the Russia’s state-owned Rosatom.

Trade between the two countries is $32.7 billion, making Turkey an important foreign partner for Russia. The accumulated Russian direct investment in Turkey reached $1.7 billion in 2013, and Turkey invested close to $1 billion in Russia.

Article source: http://rt.com/business/209643-putin-turkey-visit-energy/

Reuters / Michael Dalder

The financial crisis in Europe is prompting some nations to repatriate their gold reserves to national vaults. The Netherlands has moved $5 billion worth of gold from New York, and some are calling for similar action from France, Switzerland, and Germany.

An unmatched pace of money printing by major central banks has boosted concerns in European countries over the safety of their gold reserves abroad.

The Dutch central bank – De Nederlandsche Bank – was one of the latest to make the move. The bank announced last Friday that it moved a fifth of its total 612.5-metric-ton gold reserve from New York to Amsterdam earlier in November.

It was done in an effort to redistribute the gold stock in “a more balanced way,” and to boost public confidence, the bank explained.

“With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the bank said in a statement. “In addition to a more balanced division of the gold reserves…this may also contribute to a positive confidence effect with the public.”

Dutch gold reserves are now divided as follows: 31 percent in Amsterdam, 31 percent in New York, 20 percent in Ottawa, Canada and 18 percent in London.

Meanwhile, Switzerland has organized the ‘Save Our Swiss Gold’ referendum, which is taking place on November 30. If passed, it would force the Swiss National Bank to convert a fifth of its assets into gold and repatriate all of its reserves from vaults in the UK and Canada.

“The Swiss initiative is merely part of an increasing global scramble towards gold and away from the endless printing of money. Huge movements of gold are going on right now,” Koos Jansen, an Amsterdam-based gold analyst for the Singaporean precious metal dealer BullionStar, told the Guardian.

France has also recently joined in on the trend, with the leader of the far-right National Front party Marine Le Pen calling on the central bank to repatriate the country’s gold reserves.

In an open letter to the governor of the Banque de France, Christian Noyer, Le Pen also demanded an audit of 2,435 tons of physical gold inventory.

Germany tried and failed to adopt a similar path in early 2013 by announcing a plan to repatriate some of its gold reserves back from the US and France.

READ MORE: No ‘gold rush’: Germany keeps reserves in the US

The efforts fizzled out this summer, when it was announced that Germany decided to leave $635 billion worth of gold in US vaults.

Germany only keeps about a third of its gold at home. Forty-five percent is held in New York, 13 percent in London, 11 percent in Paris, and only 31 percent in the Bundesbank in Frankfurt.

Article source: http://rt.com/business/209591-gold-europe-gold-repatriation/

OPEC Secretary General Abdalla Salem El-Badri attends at press conference after the166th Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria on November 27, 2014.(AFP Photo / Samuel Kubani)

Tags

Currencies, Economy, Iran, Markets, Natural resources, Oil, Politics, Prices, Russia, Saudi Arabia, USA, Venezuela

Russian officials and experts warned that oil prices will remain below $80 per barrel for some time, after OPEC’s decision not to cut output. It will hurt the economies of Russia, Iran, and Venezuela – and deal a blow to shale oil production in the US.

OPEC announced on Thursday that it will not be changing production levels, leaving the daily output ceiling at 30 million barrels despite oversupply concerns and soft oil prices.

READ MORE: Oil slumps 4% as OPEC leaves output unchanged

Impact on Russia’s budget

Following the meeting, Russian Minister of Finance Anton Siluanov said that Moscow needs to review its state budget under the conditions that oil prices are likely to remain at around $80 per barrel, and not $100 per barrel, for the next few years, RIA Novosti reported.

“We need to build our fiscal and economic plans on the basis of new macroeconomic conditions, which in our opinion are not going to change quickly,” Siluanov said.

The plunge in oil prices following the OPEC decision confirmed the ministry’s outlook that Russia’s budget must be calibrated according to the lower oil prices, the head of the Russian Finance Ministry’s strategic planning department, Maksim Oreshkin, said.

“This situation once again confirms our position that Russian budget projections need to be adopted to new oil prices, which could remain [at a substantially lower level] for a long time,” he said, adding that this means a tougher approach to public spending and possible optimization.

Oil could even fall below $70 per barrel, which may negatively impact Russia since the ruble is closely connected to oil prices, market analyst at Alpari, Anna Kokoreva, told Rosbalt.ru.

“Oil prices have all the chances of falling below $70 per barrel in the near future. It is a bad sign for the Russian economy. A further drop will trigger a new wave of ruble devaluation and lead to a stagnation of oil production in the country,” she said. “In turn, the drop in national currency will accelerate inflation and the Ministry of Finance’s forecasts of two-digit values could become a reality.”

Meanwhile, a representative from Russian state-owned oil company Rosneft told TASS that the “current market situation does not require unexpected actions,” noting that “nothing extraordinary is happening.”

He explained that Rosneft has a sufficient margin of safety, since its production costs are one of the lowest in the world – just above $4 per barrel.

Hurting Iran, Venezuela, Ecuador…and US

Kokoreva pointed out that Venezuela, Ecuador, and Iran will suffer significant losses, as all three of the countries’ budgets depend significantly on oil revenues.

More specifically, countries like Venezuela and Iran will not be able to sustain their social programs run by the government if oil prices experience a sharp drop, partner at RusEnergy Mikhail Krutikhin told Russkaya Planeta.

“Iran and Venezuela are panicking due to the fall in oil prices and are trying to keep them up through any means possible. Their social programs will not withstand the low fuel prices,” Krutikhin said.

He added that Venezuela needs oil prices to be at $150 per barrel in order to balance its budget, while Iran needs $140.

Another loser in the situation is the US, since its own shale boom could be curbed by low prices. The payoff from shale decreases with every dollar knocked off the barrel price.

Meanwhile, the only clear victor, according to analysts, is Saudi Arabia, which can still make a profit even with lower prices.

“The winner of this game is Saudi Arabia, which is gradually moving towards its main goal – to oust the US shale oil from the market, make production of oil sands for the US not worth its while, and strengthen its own position. If shale projects stop in America, Saudi Arabia’s share of the market will begin to grow again,” Kokoreva said.

Playing politics is a big part of OPEC, and US shale success is a problem for Gulf-producing nations, the executive director of DV Advisors, Patrick Young, told RT.

“There are all sorts of politics involved. OPEC never misses a trick to play politics,” Young said. “There is an issue with America. The problem with America is that it is producing more and more oil at the moment and actually if OPEC as a cartel simply cut the amount of oil it produces, American shale would fill the gap.”

A Russian oil tycoon also warned that OPEC’s decision is a strike against the American market, which becomes unprofitable at $70-80 per barrel.

“In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again,” Leonid Fedun, a board member of Lukoil, Russia’s largest private oil company, told Bloomberg News.

Following OPEC’s decision, Brent Crude plunged, falling more than $3 to below $75 per barrel, while crude dropped over 4 percent to $71 per barrel.

Overall, oil prices have fallen more than $40 per barrel since mid-June, when oil peaked at $115. Low prices have been triggered by oversupply created by increased US production and waning global demand.

The next OPEC meeting will be held in June 2015.

Article source: http://rt.com/business/209579-opec-oil-supply-russia/

#OPEC BRENT OIL 74.83 -3.81% Crude OIL 71.07 -4.05%

— 8 (@Palmieri888) November 27, 2014

Kuwaiti oil minister Ali Saleh al-Omair, said that he was “happy” with the decision not to restrict output.

“I speak on behalf of the ministers, we have no target price, we have a fair price,”El-Badri said.

Oil prices have fallen more than $40 per barrel since mid-June when oil peaked at $115 a barrel. Low prices have been triggered by oversupply created by increased US production and waning demand from China and Europe.

Oil ministers from the 12 members of the Organization of the Petroleum Exporting Countries (OPEC) met in Vienna Thursday. The next OPEC meeting will be held in June 2015.

Who wins?

The decision to cut production wasn’t shared by all. The cut won’t negatively affect Gulf producers – Saudi Arabia, Qatar, Kuwait, and the UAE- since they can sustain lower prices, as they have trillions saved up in buffer funds.

READ MORE: Cut or no cut? No OPEC consensus as oil hits 4yr low

Venezuela, Nigeria, Iran, Iraq, and Ecuador were fighting to cut production to boost prices, as their economies lack the financial buffers of the Gulf States to weather low oil prices.

#OPEC leaves production quota unchanged. Market share wins. #Saudi shows the others who’s boss. Tough luck #Venezuela, #Iran, and #Russia

— Sijbren de Jong (@Sijbren_deJong) November 27, 2014

Low oil prices help big importers like China and India because petroleum products become cheaper, but hurt exporting countries because billions in revenue are lost.

READ MORE: Higher oil prices could drag OPEC’s ‘best customers’ into recession, expert warns

Oil prices also affect currencies, such as the Russian ruble, which, in tandem with oil, has lost more than 30 percent since June.

Consumers benefit from low oil prices, because it means cheaper petrol in their automobiles. Airlines make bigger margin profits as jet fuel is cheaper, and transport companies, such as a courier service or bus company, save money on petrol.

Non-aligned

Together, OPEC accounts for 40 percent of world oil output. Saudi Arabia is the largest of the 12 exporters with 16 percent of global production. The US which is not a member of OPEC pumps nearly the same amount, and Russia, also not a member, produces 14 percent.

A Russian oil tycoon waned that OPEC’s decision was a strike against the American market, which becomes unprofitable at $70-80 per barrel.

“In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again,” Leonid Fedun, a board member of Lukoil, Russia’s largest private oil company, told Bloomberg News.

The shale boom has increased US production by 60 percent since 2008, and is on par to soon overpass Saudi output.

“The shale boom is on a par with the dot-com boom. The strong players will remain, the weak ones will vanish,” Fedun said.

Earlier this week non-OPEC members Russia and Mexico held meetings with members of the energy cartel, but no agreement to cut production was reached.

“OPEC’s decision means the problem of excess oil on the market will not be solved quickly,” Russia’s Ministry of Finance said.

Other major non-OPEC energy producers are China, Canada, Mexico, Brazil, and Norway.

Article source: http://rt.com/business/209507-opec-oil-production-cut/