The price of Urals-grade crude slightly exceeded 85 dollars a barrel in early October, its highest level this year. The Urals price has since fallen 22 % to around 67 dollars a barrel. The ruble-dollar exchange rate, however, only declined 3 % from the beginning of October (down 1 % against the euro) over the same period, i.e. the linkage between the oil price and ruble’s exchange rate has been modest during last weeks.
Substantial declines in crude oil prices may indicate concerns about a global glut or possible decline in overall demand. Russia, OPEC and a few other oil-producing countries met last Sunday (Nov. 11) to discuss, among other things, new production limits. While the parties did not made decisions about new production limits, Saudi Arabia announced that it would unilaterally reduce its oil exports by 500,000 barrels a day in December. Russian crude oil production is currently at a post-Soviet record level (BOFIT Weekly 2018/40). According to energy minister Alexander Novak, however, Russia is not ruling out the possibility of new production caps if the parties reach a consensus. By some estimates, the producer countries could reach an agreement on new production limits at their next meeting in a couple of weeks. The current agreement expires at the end of this year.