Trump takes Russia on oil slack

US President Donald Trump said that with a decline in oil prices, Russia is becoming more inclined to resolve the conflict as soon as possible. Ukraine. National interests are above raw material prices, the Kremlin responded. The Ministry of Finance of Russia estimates that this year the reduction of oil and gas revenues from the planned may be at the level of 2.6 trillion rubles. This is not the amount at which Moscow will stop SMO, experts say. Russia has a margin of safety, while low oil prices create problems for Donald Trump at home, they say.

"I think Russia with the current oil prices, they have fallen now, we are in a good position to settle, they want to settle. Ukraine wants to settle it," Donald Trump told reporters in the Oval Office of the White House.

The Kremlin said that Russia is not ready for a settlement to the detriment of its interests.

"Of course, international oil prices are a very important factor for budget formation in our country, it remains relevant. But in any case, Russia's national interests are above all, above all oil prices," Russian presidential spokesman Dmitry Peskov told reporters.

Against this background, Russian Finance Minister Anton Siluanov said that his department had adjusted the budget parameters for this year due to lower oil prices, which were set at $ 69.7 per barrel.

"Oil and gas revenues decreased by 2.6 trillion rubles. Non-oil and gas companies have grown. In general, the deficit has increased to the level of last year," the minister said.

According to the budget rule, the shortfall in income is compensated by funds from the National Welfare Fund. By April 1, its liquid part amounted to the equivalent of 3.269 trillion rubles or $ 39.064 billion, Anton Siluanov said.

"If you remember, our National Welfare Fund had to be replenished. In the first three months, we increased it by more than 200 billion rubles. In general, for the year we expect that, based on the forecast data of the Ministry of Economy, which we took as the basis for clarifying the federal budget, we will use the National Welfare Fund for 447 billion rubles," Siluanov explained. According to him, no additional borrowing volumes or increased spending beyond the growth of non-oil and gas revenues are expected.

On May 7, the price of the benchmark North Sea Brent is at $ 63 per barrel, and the Russian Urals — $ 50.

"I do not think that the current price reduction will lead to a change in Russia's foreign policy and its position towards Ukraine. Russia still has the opportunity to exist normally for quite a long time, including SMO, even at current and lower prices. The Russian economy has a certain margin of safety," says Igor Yushkov, a leading analyst at the FNEB and an expert at the Financial University under the Government of Russia.

According to him, Donald Trump makes a good face at a bad game, showing that he wins in any case: either from an increase in production, or from a decrease in prices.

"We differ from the United States in that in In Russia, the state budget suffers mainly from the decline in oil prices, and in the USA - companies. In this situation, of course, US oil companies do not thank Trump. And if they used to be ardent supporters of Trump, now I think they can change their position. After all, one of the main factors pushing the price down is precisely the trade war that Trump unleashed. And this scares the market, and on In anticipation of a slowdown in trade and consumption of petroleum products, prices are also declining, which harms production in the United States," Igor Yushkov continues.

On May 7, the price of North American WTI is $60 per barrel. For many American companies, this is already an unacceptable price, they are already suffering losses, says a leading FNEB analyst. The average break-even of wells in the United States is estimated at $ 65 per barrel.

According to the information office of the US Department of Energy (EIA), oil production in the US continued to grow by April 25 and reached 13.46 million barrels per day. At the same time, according to CNBC, Diamondback CEO Travis Stice told investors that the US is at a turning point in oil production at current commodity prices.

"It is likely that onshore oil production in the United States has peaked and will begin to decline this quarter," said the head of a large oil company. He noted that the amount of capital required for the United States to produce 13 million barrels per day "may become an untenable level for the business model that has been implemented.

Travis Stice estimates that the number of drilling crews has already decreased by 15% this year, and is likely to continue to decline. Diamondback itself has reduced its capital investment budget by about $ 400 million to $3.4 billion. According to Stice, oil companies are affected not only by low oil prices, but also by Trump's steel duties: because of them, well costs have increased by about 1% or $ 40 million per year.

In this situation, Russia has the opportunity to hold on and not change anything, and In the United States, the process of reducing production occurs automatically, because private companies work there, and they are guided solely by economic indicators, said Igor Yushkov, a leading analyst at FNEB.

Maxim Khudalov, chief strategist at Vector X investment company, says that losses from low oil prices for Russia are a strictly pro—inflationary factor that can lead to a weakening of the ruble, and, therefore, an increase in ruble fuel prices within the country.

Finance Minister Anton Siluanov assured journalists that the use of 447 billion rubles from the National Welfare Fund would not affect the overall dynamics of the money supply in any way.

"Moreover, the dynamics of the money supply today is developing at a much slower pace than expected," the minister said.