Russia: Trade surplus shrinks, price for Ural oil remains in free fall
February 9, 2015
In December, exports totaled USD 34.5 billion, which represented a 30.2% decrease compared to the same month of the previous year. The reading followed the 21.7% contraction observed in November and marked the fifth consecutive month of contraction and the sharpest decrease since September 2009. Imports recorded the 15th consecutive month of decline, plunging 24.0% annually in December (November: -21.8% year-on-year). The reading recorded the sharpest fall since October 2009.
As a result of the deterioration in exports’ growth, the trade surplus totaled USD 9.9 billion in December, which was smaller than the USD 17.0 billion observed in the same month of the previous year. In the full year 2014, the trade surplus totaled USD 186 billion, which came in slightly above the USD 182 billion surplus tallied in 2013.
Global oil prices have fallen sharply over the past seven months, having a significant impact on the price for Ural oil, which is Russia’s key export commodity. On 30 January, the Ural oil barrel traded at USD 47.6, which was 10.7% lower than the same day of the previous month. Compared to January 2014, the price of Ural oil lost more than half of its value. According to the World Bank, Russia loses about USD 2.0 billion in revenues for every dollar drop in the oil price. Despite expectations that oil prices will remain low this year, Russian authorities had confirmed that the country will not reduce oil output. Meanwhile, the Russian Central Bank published its assessment of the country’s economic outlook, where it sees two scenarios. Under a baseline scenario, the Banks expects the price for Ural oil to average USD 80. Under a worst-case scenario, the Bank sees oil prices averaging USD 60.
Author: Ricardo Aceves, Senior Economist