Wednesday, 22 January 2014

William Browder: Putin's regime "will be gone within a year" when the price of oil falls to $60 a barrel

When the price of oil falls to $60 a barrel this man will be on his way out

US shale gas has already weakened Vladimir Putin's regime, but when the price of oil drops to $60 a barrel - which could well happen in the near future - the former KGB agent will be gone within a year:

There is nothing behind the facade of Vladimir Putin's regime in Russia, says William Browder from Hermitage Capital Management.
"All it will take is a fall in the price of oil to $60 a barrel and Putin will be gone within a year. You'd be surprised how brittle the system really is," he told me at the World Economic Forum in Davos.
The "fiscal break-even price" of oil needed to balance the Russian budget is now $117 a barrel. A protracted slump in crude would force the government to dig deep into its reserve funds, and that in turn would set off further capital flight.
The hedge fund manager – who describes himself as Putin's "enemy number one" – says Russia's $499bn foreign reserves would not prove much a defence in the end. "We saw this in 2008 when everything fell apart in a few months even though Russia had the world's third biggest reserves. It wasn't supposed to happen but it did."
A drop in Brent crude to $60 is not impossible. Both Deutsche Bank and Bank of America have warned of a potential glut in oil this year as sanctions against Iran are phased out and Libya's exports revive. The US is expected to add more than 1m barrels per day (b/d) this year. The Saudis may choose not to stabilise the market by cutting output, deliberately letting crude slide below the marginal cost of production of shale.

Read the entire article here

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