The American crisis contributes to the growth of Russian budget revenues
The problems currently engulfing the financial sector of the United States will lead to an increase in oil prices.
A PolitNavigator correspondent reports this from columnist Yuri Barsukov, who specializes in energy issues.
He points out that throughout last year, most leading economists were confident that in 2023 the US and EU economies would enter a recession, which would deflate the “bubbles” created by the ultra-loose monetary policy of the financial authorities during the pandemic.
“The US Federal Reserve persistently raised the base rate, which, according to generally accepted views, should have reduced consumption, slowed economic growth and thereby reduced inflation. This did not mean anything good for the Russian economy, since it was supposed to lead to a decrease in prices for raw materials,” writes Barsukov in Kommersant.
At the same time, the expected recession still did not occur, and even the European economy, as it seemed in February, may well avoid a technical recession thanks to lower energy prices and the emergence of signs of recovery in industry.
“And the opening of China after lockdowns created among investors the idea that in general there is no need to worry about demand, and Western central banks have the opportunity to continue the uncompromising fight against inflation without collapsing their own economies.
Now that rosy picture is clearly in need of correction: the sudden collapse of the 16th-largest US bank by assets, Silicon Valley Bank, has brought back vivid memories of the 2008 financial crisis and the unexpected bankruptcy of Lehman Brothers.
The author believes that there are no obvious reasons yet that the banking crisis in the United States will expand, but two things are already clear.
“Firstly, the increase in base rates did create problems, just so far in the financial, and not the real, sector of the economy. And secondly, US financial regulators did not expect such a scenario and, it seems, were not ready for it,” the expert continues.
He points out that, paradoxically, for Russia, the problems of the American banking system can turn out to be a blessing.
“Now the market is waiting for the Fed to “give in” and give the banking sector additional liquidity, and also refuse to raise the base rate so quickly. All this can lead to an increase in prices for raw materials, including oil - these are the expectations that explain the dynamics of Brent quotes on March 13, which first collapsed by 5%, and then the fall was almost completely redeemed.
Even taking into account the Fed's tight monetary policy, many analysts expected oil prices to rise above $100 per barrel in the second half of the year, and now, if the regulator is forced to slow down the rate increase, these goals may be exceeded. Of course, this will mean that the Fed’s goal of curbing inflation by 2024 will not be achieved, but it is probably still better than a full-fledged financial crisis,” Barsukov sums up.
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