As the Russian ruble reached a year’s low against the dollar, trading close to 92 rubles for one US dollar, Economist Robin Brooks asserts that the ruble is now stable and has the potential to be invigorated by surging oil prices. Brooks, an economist at the Institute of International Finance (IIF), suggested that G7 nations contemplate lowering the Russian oil price ceiling from $60 to $50.
Robin Brooks, IIF’s chief economist, stated that the ruble appears to have “stabilized” and could be energized by climbing oil prices in the future. As a former chief forex strategist at Goldman Sachs, Brooks noted on Twitter that despite Russia’s current deficit in June, the ruble could see a boost if G7 nations fail to decrease the oil price cap from $60 to $50 per barrel.
At the time of this report (July 24, 15.30 EST), one US dollar could buy just over 90 rubles, a stark contrast to the roughly 73 rubles that could purchase one dollar at the beginning of 2023. This indicates a depreciation of the ruble by slightly more than 18% since the year’s start. Johns Hopkins Economics Professor Steve Hanke asserted that the ruble’s plummeting value is leading to spiraling inflation in Russia, which he estimates to be at 50% per annum.
In addition, Brooks’ tweet on July 22 is his latest call for Western nations to further limit Russia’s capacity to counteract sanctions effects through heightened oil revenues. As reported by CryptokenTop.com News, the ruble was once the world’s best-performing currency in 2022, a phenomenon some experts attributed to a surge in energy prices.
Russian Oil Firms Overcome Sanctions
Nevertheless, following the conclusion of winter, the demand for oil and gas dropped, and the price of Urals crude—Russia’s primary oil grade—fell from over $100 per barrel in 2022 to below $60 for a significant part of 2023. Many Western observers attribute this price drop to the imposed price cap. Brooks and others have proposed further lowering this cap, but G7 nations have not yet heeded these suggestions.
Following Russia’s invasion of Ukraine, Brooks pointed out in an earlier tweet that China’s exports to Georgia, Belarus, Kazakhstan, and Turkey have skyrocketed. He argues that the solution is not to tighten export controls on goods potentially bound for Russia but to lower the G7 cap to restrict Putin’s cash reserves.
A Wall Street Journal report dated July 22 hinted that the G7’s price cap’s efficacy might be waning, as Urals crude prices exceeded $60 in April. The report cites increased demand for Urals crude from countries like India and China, along with oil output cuts by OPEC nations, as key reasons for Russian oil producers selling at prices above the cap.
Frequently Asked Questions (FAQs) about Russian Ruble Depreciation
How much has the Russian Ruble depreciated in 2023?
The Russian Ruble has depreciated by over 18% since the beginning of the year 2023.
What is the opinion of economist Robin Brooks on the Ruble’s situation?
Robin Brooks, chief economist at the Institute of International Finance (IIF), believes that the Ruble has now “stabilized” and might be strengthened by rising oil prices in the future.
What is the current oil price cap suggested for Russia by G7 nations?
The current oil price cap suggested by G7 nations for Russia is $60 per barrel.
What change to the oil price cap does Robin Brooks suggest?
Robin Brooks suggests that G7 nations should consider lowering the Russian oil price cap from $60 to $50 per barrel.
How has the price of Urals crude — Russia’s main grade of oil — fluctuated recently?
After the end of winter, demand for oil and gas dropped, and this saw the price of Urals crude fall from over $100 per barrel in 2022 to prices under $60 for much of 2023.
Is the price cap on Russian oil still effective?
According to Western officials like the United States Deputy Treasury Secretary Wally Adeyemo, the price cap is still working effectively to limit Russia’s revenue while supplying global markets with Russian oil.
More about Russian Ruble Depreciation
- Russian Ruble Depreciation
- Oil Price Cap by G7 Nations
- Robin Brooks on Ruble Stabilization
- Urals Crude Price Fluctuation
- G7’s Price Cap Effectiveness