As oil continues to test new decade-lows, it continues to take a lot of stuff down with it. Yesterday, it was Saudi Arabia’s government finances, and today it’s the Russian ruble. The currency is now worth less than less than $0.014, a record low.
Russia is one of the world’s biggest producers of oil outside of OPEC and US shale drillers, which have been locking horns for more than a year over production levels, keeping prices low. Russia has made the occasional noise about cooperating with OPEC in a bid to boost prices, but it continues to ramp up production.
Like Saudi Arabia, oil revenue forms a big portion of Russia’s government revenue, and it can hardly afford to lose out on that money while still dealing with a hurting economy and crippling sanctions thanks to its conflict with Ukraine.
This time last year, oil’s surprise turn for the worse made for a funny financial joke at Vladimir Putin’s expense, but it’s no longer a laughing matter: Russia’s fortunes are clearly tied to oil, which is dragging it to uncharted depths.