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Destruction at Beiji oil refinery during the military operations, some 250 kilometers (155 miles) north of Baghdad, Iraq
AP Photo
Oil prices continue to do damage.
BEARISH

Cheap oil is greasing the skids for the Russian ruble’s decline to record lows

By Melvin Backman

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.