American oil prices fell to -37 dollars per barrel. This indicates primarily a deep crisis in the world. The main reason for the collapse was the OPEC+’s inability to agree on a reduction in production on time. Oil is no longer the main economic resource, which means that countries such as Russia are collapsing, because the Russian economy relies on fuel resources.
The low price of Russian oil will undermine the budget of the Russian Federation, and therefore weaken the position of the Russian authorities. The fall in oil and gas prices, and after it the collapse of the ruble exchange rate, speaks of Russia’s real place in the world. In the economic sense, Russia is a monkey with a grenade at a gas station. Urals oil, which is traded by Russian companies, also became negative — minus $ 2 per barrel. At such prices, the Kremlin will not be able to finance pensioners and officials, nor fully conduct an aggressive policy.
The fall of oil prices will probably hit Ukraine painfully due to the clumsy economic policies of the Ukrainian authorities. On the one hand, most of Ukrainian imports are energy resources, so we will pay less for oil and gasoline. But on the other hand, duties and VAT are tied to the price of oil. Therefore, the less oil will cost, the less money will go to the budget. With the collapsing economy this is a major blow to social standards.
Ukraine must take advantage of the current situation. Firstly, in Ukraine there are great opportunities for oil storage, and therefore we must urgently enter this market. Secondly, low oil prices are a real tool to put pressure on Putin’s criminal regime.