Russia: Russia's overseas sales are in free fall, oil prices are on a roller coaster
August 31, 2015
In July, Russia’s exports totaled USD 28.2 billion, which represented a 39.0% contraction over the USD 46.2 billion seen the same month in 2014. July’s drop was the ninth consecutive at a double-digit rate and marked the fastest rate of contraction since August 2009. Imports totaled USD 17.0 billion in July, which marked a 41.9% decrease compared to the USD 29.2 billion seen in July 2014.
As imports continue to contract more pronouncedly than exports, the trade surplus in July continued to narrow. The trade surplus totaled USD 11.2 billion in July, which was below the USD 17.0 billion surplus recorded in the same month last year. The accumulated trade surplus in the 12 months up to July totaled USD 170 billion, which came in below the accumulated USD 176 billion registered in the 12 months up to June. Russia’s trade surplus is dangerously approaching the levels seen in mid-2011.
A period of heightened volatility in the past weeks prompted the price of Urals oil—Russia’s key commodity export—to fall sharply. On 24 August, the price of the commodity traded at USD 40.8 per barrel, which reminded the levels last seen at the beginning of 2009, at the height of the global financial crisis. However, at the end of August, the price of Urals oil recovered some of the ground lost and traded at USD 47.1 per barrel. At this level, the price of Urals oils is more than half the price seen in the same month las year. The recent volatility reflects a sell-off in commodities mainly due to the market turbulence created by tumbling stock markets in China, which spread globally, hurting most emerging markets. Meanwhile, the mild recovery seen in recent days stemmed from a rally in global oil prices, which reflected oil specific news, namely OPEC’s comments that it was ready to talk with other producers regarding “fair prices” as well as that U.S. oil production continues, although at a slower pace.
Author: Ricardo Aceves, Senior Economist