If oil does not grow - Russia will become second Venezuela

It's not a secret that the entire Russian economy depends primarily on the export of oil and gas. Moreover, in a certain way, it also largely depends on oil, because the price of natural gas is tied to its price.

Meanwhile, from the officials of the Russian Federation, more and more comments are heard that Russia should not be afraid of falling oil prices.

That is, government officials are trying to convince investors that a country completely dependent on hydrocarbons was able to get rid of this dependence.

Looking ahead, we answer - no, but then in order.

The another day, Finance Minister Anton Siluanov, while on a visit to Washington, said that if OPEC countries and Russia did not agree to extend the transaction to reduce oil production, and black gold again begins to fall in price, you should not worry, because Russia has enough reserves not to feel the serious impact of the next crisis.

It makes sense to clarify that Russia is less satisfied with the agreements reached with OPEC to reduce production. Firstly, due to the fact that the vacated market niches are filled with slate from the USA, which is not regulated by any agreements. And secondly, by reducing production, the Russian Federation threatens those fields that it has to conserve because many of them were developed during the Soviet era, and when their production ceases, in fact, the self-destruction mechanism of the well starts.

Earlier, the head of the Bank of Russia Elvira Nabiullina said that even with the price of oil at $ 35 per barrel, the Russian Federation had nothing to fear. Then she supported her words with the fact of the growing gold and foreign exchange reserves of the Russian Federation.

But the current level of the gold and foreign currency reserves of the Russian Federation, taking into account the troubled assets of Russian banks, did not rise at all, but rather remained at the level (and even lower) of April 2015.

One more thing is important - the unprofitability of production at many Russian fields, which were developed, as noted above, in the era of the USSR. Their development was carried out taking into account other, extremely inefficient and costly technologies today, and with a completely different price framework. Roughly speaking, the network of Russian drilling is not a monotonous, but rather a motley picture of representatives of ‘the Stone and the Iron Ages’, with elements of modern technology.

If you look at the rating of oil prices, then we are on an uptrend, which the maximum in a month should turn into a strong fall to reach the peak price. An additional reason for the strong decline in the price of black gold could be the global economic crisis, which most experts predict. And there is an opinion that Russia, as a country whose budget depends on the prices of sulfur-hydrogens (as if its officials did not assure us of the opposite), may not survive it. It is likely that we will observe a complete paralysis of the economy, as in Venezuela.

The information above cannot be considered as an investment advice and past results do not indicate future performance.

**Investors should have experience and understand the risks of losing all the initial investment.

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