The ruble headed for its longest streak of declines since May 2012 after OPEC effectively abandoned output limits, spurring concern Russia will struggle to emerge from a recession as low oil prices hurt revenue in the world’s biggest energy exporter.
The Russian currency declined for a ninth day, losing 0.6 percent to 68.55 against the dollar by 10:28 a.m. in Moscow. The last time the ruble fell for as long was in May 2012, when the price of Brent sank 15 percent on concern China’s economy was slowing and as a debt crisis in Europe worsened.
Fast-forward 3 1/2 years and the Organization of Petroleum Exporting Countries has pushed crude lower after ditching its long-time strategy of limiting production to control prices at meetings in Vienna on Friday. That’s adding to concern a global crude surplus will be protracted and increase Russia’s economic pain, where oil and natural gas contribute almost half of the nation’s budget revenue.
“After the OPEC meeting it’s becoming clear that expensive oil will be hard to expect in the next few years,” Vladimir Miklashevsky, strategist at Danske Bank S/A, said Monday. While oil’s trajectory is similar to May 2012, “the scale is different,” he said.
While crude tumbled that month, it started near $119 a barrel and ended at about $102. By comparison, Brent hasn’t traded above $50 a barrel since the start of November and was 64 cents off a six-year low on Monday. Oil has slumped 40 percent since Saudi Arabia led OPEC’s decision in November 2014 to maintain output and defend market share against higher-cost U.S. shale producers.
The yield on five-year government bonds rose two basis points to 10.05 percent. The benchmark Micex Index of stocks climbed 0.3 percent to 1,760.58.