Wednesday, 7 May 2014

Ukraine & the Price of Oil

A glance at the chart below is a vision of a dog that hasn't barked.  There's World War 3 brewing in Ukraine, and yet Brent has been even more tightly range-bound than the $100-120 we'd become accustomed to. 

What to say ?  Obviously no-one imagines Russia is about to stop selling oil, either to punish the West or as the result of an embargo.  Has the Invisible Hand decided that in the great scheme of things it is all just posturing on both sides, and that the annexation of Crimea is just small beer ?

We've noted several times on the QT compo how the BBC has resolutely downplayed the whole crisis.  Perhaps they take their lead from the Brent market when it come to foreign affairs.  Missing airliners, missing schoolgirls, and lurid murder trials seem to be what counts for top-headline foreign news coverage.

It's an interesting thought that Russia re-ordering the FSU might be a sideshow.  What's the main event, then - are we just all sitting around waiting for the Chinese economy to pop ?  Maybe Brent would be forced to notice that.



BrianSJ said...

How big is the 30 yr Gazprom-China deal to be signed this month, along with other Russia/China agreements, when Putin goes to China?

Nick Drew said...

Bigger than it would have been, Brian, had not the Ukraine thing blown up: it will have made the Russian side a good deal more 'flexible'.

We have looked at this before (e.g. here and here): the Russian going-in point was that (a) the deal had to be 50:50 gas and manufactured goods and (b) gas price to be oil-indexed (of course - a religious matter with them)

the Chinese told them where they could stuff their oil index and their crap trucks

it is strongly to be imagined that the final form of the deal will contain little reference to either ...

Demetrius said...

It is being manipulated, but by whom and to what purpose?

Timbo614 said...

It's not just oil tho' is it. Stocks have been remarkably resilient to the prospect of WW3 too.

Disbelief? Complacency?

K said...

I don't think anyone really cares about Ukraine.

It seems like most goings on are more about internal Russian issues and it'll be interesting to see where things are in two years. How bad will the Russian economy be? How many internal Russian republics will succeed in their aims for Crimean style autonomy? How much worse can the Russian media crackdown get?

When you look at it from internal Russian issues, Putin may have shot himself in the foot and destabilised the whole federation.