Demura spoke about what sanctions really threaten the Russian economy, budget and financial markets in an interview with BUSINESS Online; NI cites the most interesting passages from it.

Of course, this sanctions package will not cause any resistance from Europe. The fact is that the European Union some time ago made a political decision to diversify sources of energy supplies. Essentially, this means a reduction in the share of Russian oil and gas in the European market and an increase in the share of liquefied natural gas, including shale from the United States and oil from other supplying countries. In the EU they take a long time to harness, but they travel quickly. And their fundamental solution will lead to a general reduction in revenue from the export of Russian energy resources and, accordingly, a fall in Russian budget revenues. And the new American sanctions only reflect the desire of Americans to take advantage of this changed reality.

About shale gas

There are completely transparent prices on the gas spot market. Now American gas, after being delivered to Europe and liquefied (that is, converted back into a gaseous state), costs approximately $100 per thousand cubic meters. While for Gazprom the price bottom, below which you can only sell gas at a loss, is around $150 per thousand cubic meters. What could be disadvantageous for Europe in terms of reorientation to liquefied gas supplies from the USA and Qatar? For Europeans, an increase in its supplies is only a plus, since supplies from overseas diversify the European gas market and lead to lower prices there. As for the opinion of our so-called experts, these same people said that American gas would never come to the European market, and even earlier that the shale revolution in North America would not lead to a decrease in oil and gas prices. You should not rely on such clearly biased assessments, since life has repeatedly demonstrated their falsity.

A new, very large shale oil field is beginning to be developed in Texas. There is so much associated gas in this field that Texas oilmen say: “We will give the gas for free, subject to signing contracts for oil supplies.” This is an indicator that an energy carrier such as natural gas is becoming very cheap in the context of the shale revolution.

It’s just that Gazprom’s products are no longer competitive in the foreign market. Our monopolist has low gas production costs (about 25 - 30 dollars per thousand cubic meters), but all this is done on old infrastructure, including export infrastructure. Creating a new one and maintaining an existing one sharply increases the cost of gas for end consumers.

About gas pipelines

Why worry about the fate of Nord Stream 2 when Nord Stream 1 is underutilized? Why are we interested in building essentially unnecessary new capacities for pumping gas to the West? I think it's all about construction contracts. Excavation work and laying infrastructure are the tastiest pieces of government orders, not to mention kickbacks. Hence all the excitement around Nord Stream 2, Turkish Stream or Power of Siberia. The guys are digging the ground, the infrastructure is more expensive than gold.

Of course, many European companies will find themselves in a difficult situation, and not just those that help us build export pipelines. The sanctions essentially impose a ban on any investment in the Russian oil and gas sector. But this is not the main thing. Nobody needs Turkish Stream except Gazprom. The fact is that the Israelis have already begun laying their gas pipeline to Turkey from the Israeli part of the giant Leviathan gas field in the Mediterranean Sea. So Türkiye is in any case turning into a hub for supplies of Middle Eastern gas to Europe. The Russian “Stream” is not of such fundamental importance for her. The Israeli gas pipeline to Turkey will be ready next year.

About the future of the ruble

The new sanctions package greatly tightens the US position towards Russia. We were already largely cut off from global financial markets. The new sanctions make this cut-off final. If Trump signs a law on new sanctions (which there really is no doubt about), this, firstly, will kill the ruble, because investors will not be able to carry out carry trade operations ( borrow in stable currencies at low rates and invest in unstable currencies with high rates - approx. ed.) with Russian and government and corporate securities. These restrictive measures from the United States will simply destroy our financial market.

Secondly, serious problems will begin with replenishing the Russian treasury from gas and oil revenues. Therefore, I repeat: the new American sanctions are very serious and only stupid and short-sighted people can laugh at them.

In addition, what is even worse for the Russian economy is that now the sanctions regime against Russia is really here to stay. Neither Trump nor any other US president, according to the text of the new law, will be able to lift anti-Russian sanctions by his decision. The sanctions are now codified. This is the law, not decrees of the US President or decisions of the US Treasury. Now only Congress can lift sanctions.

A possible ban on the purchase of Russian debt will not cause damage to the American and Western banking system as a whole, since the volume of purely public debt in Russia is ridiculous. True, taken together with corporate debt, it exceeds $500 billion, but on a global scale this is quite a bit. For the West, there will be no damage from the ban on lending to Russia and our issuers, but this will hit the ruble very hard, given the upcoming payments on the debts of Rosneft, Gazprom and other state-controlled corporations. Typically, debt is refinanced, meaning new loans are taken out to pay off old debts. If the West refuses to lend to us at all, we will have to give up accumulated foreign exchange reserves to pay off the debt, and this will hit (and hit very hard) the ruble.

The problem will arise of the impossibility of financing a number of state programs due to a lack of funds in the Russian budget. Access to technology will be further limited. Corporate defaults are also possible. Our “favorite” oligarchs already have liabilities that exceed their assets, and this step by the US Congress only worsens the situation.

The ruble will fall first. However, this is not directly related to sanctions. The Russian currency should collapse in the near future and without tightening anti-Russian sanctions, since the market situation is negative for it. Markets will soon begin to fall and there will be a flight from risky assets, which include bonds of developing countries and their companies. Speculators entered into these risky assets with huge leverage ( purchase of securities using borrowed funds from brokers - approx. ed.). Soon the crowd principle will come into play when several players begin to dump ruble assets, deciding that the risk is already too great, and the rest will follow their example. Despite the fact that the dollar is verbally the most hated asset, speculators will run to dollars. I think the collapse of the ruble will begin in August.

The first targets of attack by speculators on the ruble are 97 and 125 rubles per dollar. It is difficult to say when speculators will hit these targets - this year or next. The exact time is not so important, the main thing is that the target indicators of the ruble exchange rate have been very clearly defined.

Moreover, the situation on the foreign exchange market is in no way connected with the presidential elections. And the Russian authorities, by and large, cannot influence it. The Central Bank does not have free money; our financial market is completely at the mercy of “hot” Western capital. We are mainly talking about the debt and foreign exchange markets. Analysts, of course, will talk about how they are holding the ruble exchange rate before the elections, or, on the contrary, talk about why the authorities did not keep the ruble from collapsing on the eve of the elections. But all this has nothing to do with real market processes.

The Reserve Fund has already been spent almost entirely, and the Fund for Future Generations has already been torn apart by 40 percent somewhere, that is, invested. Therefore, gold and foreign exchange reserves are no longer so large. especially if you compare the balances of these reserves with the total external debt - corporate and government. Everything that the Central Bank now has, if we also subtract the payment for imports that the country needs for 3-6 months, will not be enough to pay off even the majority of Russian debts. The Central Bank's liquid reserves are now 2 - 2.5 times less than the total external debt. The Central Bank is unable to ensure long-term stability of the ruble. There is simply no money for this. Hence the introduction of a floating exchange rate, which in practice means that at any moment the ruble can collapse by half.

About oil prices

Sanctions do not affect the oil market. If even the big mess in the Middle East - military actions in Syria, Iraq and even the added diplomatic war between the Saudis and Qatar - did not affect oil prices in any way, then what can we say about new anti-Russian sanctions. Their list does not include a direct ban on the import of Russian energy resources, which could probably keep oil prices from falling again.

Oil grew due to the actions of speculators, primarily due to an excess of dollar liquidity, due to “quantitative easing,” that is, pumping the Western economy with money. Events in the Middle East were only used by speculators as an informational occasion to further heat up the market and push prices up. But when the price of oil falls (again, for purely financial and even psychological reasons), political events cannot do anything about the fall of the market. The market simply does not pay attention to this so-called force majeure. It is not various political events that determine market movements, but market movements that determine our perception of these events.

Now oil is hovering around $50 per barrel, because such a hover always completes the correction in oil prices before a new fall. The oil market just took a pause before going down well - by 15 percent to 34-35 dollars per barrel ( now above $48 - approx. ed.).

Moreover, there are no particular fundamental reasons for this. The main reason is half a million oil traders and the so-called wave theory of their behavior. After the fact, the fall can be explained by anything. For example, a slowdown in the global economy, a drop in demand for oil, or something else.

Even a real change in the dynamics of energy consumption does not affect the oil market in any way. A simple example: we all witnessed how the price of oil fell from $140 per barrel to $30 in less than a year. At the same time, the balance of real demand and supply for oil changed by a maximum of 2 percent. That's all. This balance does not affect market movements in any way.

But the price of oil will not remain at current levels. The cost of a barrel will fluctuate in the range from 30 to 60 dollars, I would say, until March 2018 (just before the Russian presidential elections, but this is pure coincidence). Then there will be a collapse in oil prices to 12 or even 9 dollars per barrel.

The well-known Russian trader, as well as financial analyst and commentator Stepan Demura, in an interview given to the Business Gazeta publication, commented on the situation with the new, unprecedentedly harsh sanctions imposed by the United States on Russia, and also made a disappointing forecast regarding the future of the ruble, the exchange rate of which, in relation to The dollar may soon rise to 120 rubles.

Sanctions will deal a severe blow to the Russian economy

In his commentary, Demura paints a bleak outlook for the Russian economy in light of the new American stations: as we know, many in Russia harbor hopes that, like the previous ones, they will have only a limited effect. Demura is in a hurry to dispel these hopes. According to him, the new package of sanctions seriously strengthens American positions in relation to Russia, which, already to a large extent, was cut off from global financial markets after 2104. New sanctions bring this situation to its logical conclusion, therefore, after Trump signs these sanctions, “of which no one doubts,” this will first kill the ruble: investors will no longer be able to play carry trade with Russian sovereign obligations and corporate securities, “ thus, these sanctions will simply destroy the Russian financial market,” says Demura. Secondly, the Russian treasury will begin to have serious problems due to a decrease in gas and oil revenues. The expert repeats that the new sanctions are very serious, and only very stupid and not far-sighted people can laugh at them. And, what’s worst, the sanctions regime against Russia has been established seriously and for a long time - not one of the presidents, not Trump himself, nor any next president, according to the approved text of the new law, has the right, without the consent of the legislative branch, to cancel or change by his own decision anti-Russian sanctions. “They have now become part of American law, sanctions after which can only be lifted by Congress.” In addition, in the end, things may come to the point that the West will refuse to lend money to Russia at all, which will hit the ruble very hard, especially taking into account the upcoming payments on the debts of Gazprom Rosneft and other state corporations. According to the expert, in a normal situation, debts are refinanced - that is, new loans are taken out to pay off old debts. If the West decides to stop lending to borrowers from Russia altogether, then in order to pay off debts they will have to give up foreign exchange reserves, which, as you understand, will hit the ruble very hard.
As for the consequences for the Russian economy as a whole, they will be truly destructive. Due to a lack of funds in the Russian budget, problems have already arisen with financing government projects; access to advanced technologies will be even more difficult. Corporate defaults can be expected. Our “favorite” oligarchs already have liabilities that exceed their assets, and new sanctions only worsen this situation. Demura also commented on official statistics and reports from the government and the Central Bank, according to which the macroeconomic situation in the country looks quite stable. According to him, all such forecasts are of little value. Usually everything happens exactly the opposite, says Demura, and continues: “if the authorities assure you that everything is fine, then expect another financial and economic collapse.” According to Demura, this collapse is really just around the corner, and the first victim of this collapse will be the ruble. Moreover, oddly enough, the upcoming collapse of the ruble is not directly related to anti-Russian sanctions: the ruble will collapse in the near future on its own. First of all, this is due to the current situation in global financial markets, mainly in the debt markets of developing countries, from which there is a flight of investors, which may soon become panicky. “We should expect an imminent decline in markets and a flight from risky assets, which include bonds of developing countries, including Russia and their companies. At one time, speculators entered into these assets with huge “leverage” (purchase of securities using borrowed funds from brokers - editor's note), says a well-known trader.
However, we should soon expect that the crowd principle will come into play, when several large players rush to dump ruble assets, considering that the risks are already too great, the rest will rush to follow this example, and I will save myself in the dollar.

Demura predicts a collapse in the ruble exchange rate in the coming weeks

The collapse of the ruble will begin this August, says Demura, who does not agree with the majority opinion. Stepan Demura is confident that we should expect figures in 97 and 125 rub. per dollar. This could happen either before the end of this year or at the beginning of the next. Moreover, the situation on the foreign exchange market will not be in any way connected with the presidential elections, since the Russian authorities are simply not able to influence it. The government has no available funds, and the financial market in Russia is completely at the mercy of Western money when it comes to the debt and foreign exchange markets. At the same time, the notorious “airbag”, or Russian gold and foreign exchange reserves, which, as we know, exceed $412 billion, cannot save the ruble from collapse. Because, in fact, Russia's reserve fund has already been almost completely spent, and the fund for future generations is almost half spent. Because the funds of this fund were “unclear where they were invested.” That is, in fact, the country’s gold and foreign exchange reserves are not that large. Especially in comparison with the total external debt of state and corporate. According to Demura, everything that the Central Bank has today will not be enough even to pay off most of the Russian debts - the Central Bank has liquid reserves that are significantly smaller than the external debt. “There is simply no money for the stability of the ruble,” Demura summarizes, continuing that this is the real reason for the introduction of the notorious floating exchange rate. The ruble could collapse by half at any moment.

Europe will not help the Kremlin

Stepan Demura is confident that Russia’s hopes for the European Union to resist American sanctions are groundless. According to the analyst, the fact is that the European Union, specifically in order to reduce the share of Russian oil and gas in its market, has already made a political decision regarding the diversification of energy suppliers, “for this we must say a big thank you to Vladimir Putin and his policies.” Ultimately, this will lead to the fact that the export revenues of Russian oil and gas exporters will be seriously reduced, and this, naturally, will lead to the fact that Russian budget revenues will decline even further. There is no point in seeing any special malicious intent in the Americans’ desire. “As they say in business, it’s nothing personal—they just want to take advantage of the current situation,” the analyst is confident.

Shale gas supplies from the USA could ruin Gazprom

Stepan Demura also ridiculed the assertion of a number of officials and experts that American liquefied gas, given the cost of transporting it to consumers in Europe, will be much more expensive than Russian gas, which, as is known, comes to Europe via pipeline. A well-known trader suggests leaving these statements “on the conscience” of those experts and officials who make such statements. Since, in fact, already now the cost of American gas delivered to Europe by tanker and liquefied (turned back into a gaseous state) does not exceed 100 US dollars per 1000 cubic meters. At the same time, Gazprom cannot sell gas at a price below $150 per thousand cubic meters, without the work being a loss. “Look at what could be disadvantageous for Europe in reorienting to liquefied gas supplied from the USA or Qatar,” Demura sneers. Europe will never object to the supply of liquefied gas from the United States, if only because it leads to lower prices for consumers and diversifies the market, the famous trader continues, and recalls that the so-called experts a few years ago “beat themselves in the chest” and argued that the shale revolution in the United States would never cause a reduction in energy prices. Moreover, Demura emphasized that the shale revolution in the United States continues. There has been an increase in the number of gas hubs designed for the export of liquefied gas. In addition, the development of a new very large shale oil field is beginning in Texas, about which the Texas oil workers themselves say that they are ready to give this gas for free, if they are ready to sign contracts for oil supplies. This proves that natural gas, as an energy carrier in the context of the shale revolution, is becoming extremely cheap.
Speaking with journalists about American sanctions, Demura also touched upon the topic that is currently being discussed in the Russian media, regarding the fact that the United States intends to hinder the construction of the Nord Stream 2 gas pipeline; he doubted the need to build a new gas pipeline, since Nord Stream 1" is underloaded. He suggested that the real reason that the Russian authorities want to build this gas pipeline is corruption. “I think it’s all about construction contracts,” says the expert. In his opinion, contracts of this type are the most tasty morsels of government orders, not counting kickbacks. This explains all the excitement around Nord Stream, Turkish Stream, or the Power of Siberia gas pipeline. “The guys are digging the ground, and the infrastructure is more expensive than gold,” says Demura.
In addition, the expert recalled that many European companies find themselves in a difficult situation after Trump signs the new sanctions law. This will call into question Russian projects such as Turkish Stream, since the pipes of this gas pipeline along the bottom of the Black Sea were to be laid by an Italian company, which may now be subject to sanctions. But don’t be upset, because no one needs the Turkish Stream except Gazprom,” Demura is sure. He explains this by the fact that work has already begun on laying a gas pipeline to Turkey from the Israeli giant Leviathan field, which is located in the Mediterranean Sea. It will be ready in 2018. Thus, Türkiye is turning into the largest hub for the supply of Middle Eastern gas to the European Union. This situation will further worsen Russia's position in the European market.

Material prepared by Alexandra Melnik

Well-known Russian trader and financial analyst Stepan Demura is confident of this, reports Dialogue.UA.

Russian billionaires fleeing the country obviously (albeit silently) agree with the analyst’s words, which once again confirms that propaganda chatter about the revival of greatness only affects the narrow-minded man in the street living from paycheck to paycheck, while the most knowledgeable and wealthy part society is leaving Russia en masse and transferring their capital to the West (Reuters reports about the flight of Russian money bags, citing a survey conducted among Russian multimillionaires and oligarchs. Author's note).

The authorities cannot ignore the current situation, but they have no choice but to admit the failure of the “deoffshorization” policy, announced with such pomp by Putin himself several years ago. This confirms that no exotic measures, such as, for example, closing the borders of Russia, both for exit and for the movement of capital, no matter how much the jingoists dream about it, are simply not feasible.

According to Demura, neither officials nor representatives of law enforcement agencies will ever agree to this. This, firstly, contradicts their personal interests, and secondly, such decisive actions require the presence of a state ideology that would be shared by the country's elite. The Russian elite has no ideology, the analyst is sure.

According to the expert, representatives of the “Russian elite” have no motivation to do anything: “neither the bureaucracy nor the security forces.” All resources are divided, all posts are distributed among our own. The only motivation for active action remained only with the “hungry colonels”, of whom many have “proliferated”, and who, like “a pack of hungry jackals, begin to run and bite the big guys.” They still have motivation - they want to “grab their piece.”

But isolating the country from the West is also not among their interests. “Everything in the country is completely rotten,” says the expert.

Meanwhile, according to a Reuters publication, about 200 of the 500 largest Russian businessmen have chosen to leave Russia over the past three years. This may occur not only due to Putin’s “deoffshorization” policy, but also due to the fact that oligarchs with access to information understand that Russia, or rather the class that shares responsibility for Putin’s policies of recent years, will inevitably face punishment from the international communities and they simply don’t want to be close to Putin when this moment comes (ed.).

Stepan Demura talks about this situation like this: “there is such a thing as world order.” The expert is confident that thanks to this world order, the world maintains a situation in which it is convenient for the global financial and industrial elites to conduct business. And no one in the world is allowed to disrupt this established order of things because countries such as the USA, the European Union, and China stand behind it.

“And then suddenly, a country with a GDP volume like Spain’s is challenging the world order.” According to the expert, the main miscalculation of Putin’s policy is that the Russian authorities violated the principle of the inviolability of borders, thereby challenging the generally recognized world gendarme, that is, the United States. This happened at a time when Russia annexed Crimea, violating the territorial integrity of Ukraine, the guarantor of whose territorial integrity was the United States, Great Britain, and Russia itself. Thus, a situation has arisen that “if no one responded to it in any way, then these guarantees are worthless,” says Demura.

“Some idiot came and left his show-off, and the United States sits and clicks in one place,” Demura sneers.

“This guy” (the expert is obviously referring to the President of the Russian Federation Vladimir Putin - author's note) has one advantage - he is a lawless man. And besides, he has some rusty nuclear missiles with which he scares those around him."

But, according to the expert, “the world looked at each other, looked at each other, calculated, and realized” that a possible severance of economic ties with the Russian Federation, headed by Putin and Co., would cost significantly less than turning a blind eye to the violations of the established order of things and pretending that nothing happened because it was fraught with loss of face for the West.

The loss of even tens of billions of dollars is nothing compared to the fact that if someone in the world sees that someone dared to violate the established international order, the inviolability of borders, and was not punished.

Demura believes that Putin’s big mistake was that Russia began rattling nuclear weapons. As a result, according to Stepan Demura, such a situation will end with Putin simply being “smeared against the wall.” It is also significant that Russia is on the sanctions list in the company of countries such as North Korea and Iran.

Speaking about sanctions, Demura emphasized that Russia was unequivocally warned several times that in the West everything is known about dishonest representatives of the Russian “elites”.

According to the expert, the first warning to Putin and his entourage came during the so-called “Panama Scandal”, during which, due to leaks that, according to Demura, were deliberately allowed by the intelligence services to send a signal, including to Russian corrupt elites, the world community learned about such personalities as cellist Roldugin, who is probably one of Putin’s “wallets.”

“They explained to you in Russian what will happen to you if you continue to behave this way,” says Demura.

"We have everything for you." Normal people, according to the expert, in their place, would “scratch their turnips,” would try to come to an agreement with the West, “resolve the issue of Crimea” in such a way as to save face in front of the “cotton wool.” For example, leave Donbass and hold a new referendum in Crimea with the participation of Ukraine, offer autonomy for the peninsula, etc.

According to the expert, “the West would scratch their heads and offer some option acceptable to Putin, and the issue would somehow be resolved.” But the Putin regime did not take such a step; on the contrary, it demonstratively got involved in the Syrian conflict and began to help North Korea.

“Where do you think this little baby (Demura alludes to the head of the DPRK Kim Jong-un - author’s note) has made such progress in rocket science and the production of nuclear weapons in just the last few years,” asks Demura.

Demura compared the behavior of the Russian authorities to the actions of a person who pokes a bear with a stick, not paying attention to the fact that the door to its cage is open. The consequences of such a policy will be difficult for Russia.

Demura also addressed the question of whether there is a risk of nuclear war between Russia and the West. According to the expert, all such speculations have no basis.

“Well, who will launch something there? Are you going to destroy your assets and your family?” asks Demura.

The expert quoted the words of Zbigniew Brzezinski, who back in 2000 said that the Russian elite had $500 billion in Western banks.

“This means that Russia does not have any independent elite.” (And indeed, judging by the Reuters publication about the flight of Russian oligarchs to the West, then today, 17 years later, these banks no longer hold $500 billion, but at least twice as much. Author’s note).

“1% of world GDP does not challenge 50% of GDP,” the expert sums up.

“These things end very badly,” says Demura.

It was previously reported that the issue of the possible is now being discussed with fear in the Kremlin.

It was also reported that the bloody regime of the current owner of the Kremlin began in Russia.

The rich only laugh. Broadcast at 19:05
The incomes of Russian billionaires are growing
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A well-known analyst predicts a fall in the Russian currency and the rapid replacement of Russian gas in Europe by American

Of course, this sanctions package will not cause any resistance from Europe. The fact is that the European Union some time ago made a political decision to diversify sources of energy supplies. Essentially, this means a reduction in the share of Russian oil and gas in the European market and an increase in the share of liquefied natural gas, including shale from the United States and oil from other supplying countries. In the EU they take a long time to harness, but they travel quickly. And their fundamental solution will lead to a general reduction in revenue from the export of Russian energy resources and, accordingly, a fall in Russian budget revenues. And the new American sanctions only reflect the desire of Americans to take advantage of this changed reality.

About shale gas

There are completely transparent prices on the gas spot market. Now American gas, after being delivered to Europe and liquefied (that is, converted back into a gaseous state), costs approximately $100 per thousand cubic meters. While for Gazprom the price bottom, below which you can only sell gas at a loss, is around $150 per thousand cubic meters. What could be disadvantageous for Europe in terms of reorientation to liquefied gas supplies from the USA and Qatar? For Europeans, an increase in its supplies is only a plus, since supplies from overseas diversify the European gas market and lead to lower prices there. As for the opinion of our so-called experts, these same people said that American gas would never come to the European market, and even earlier that the shale revolution in North America would not lead to a decrease in oil and gas prices. You should not rely on such clearly biased assessments, since life has repeatedly demonstrated their falsity.

A new, very large shale oil field is beginning to be developed in Texas. There is so much associated gas in this field that Texas oilmen say: “We will give the gas for free, subject to signing contracts for oil supplies.” This is an indicator that an energy carrier such as natural gas is becoming very cheap in the context of the shale revolution.

It’s just that Gazprom’s products are no longer competitive in the foreign market. Our monopolist has low gas production costs (about 25 - 30 dollars per thousand cubic meters), but all this is done on old infrastructure, including export infrastructure. Creating a new one and maintaining an existing one sharply increases the cost of gas for end consumers.

About gas pipelines

Why worry about the fate of Nord Stream 2 when Nord Stream 1 is underutilized? Why are we interested in building essentially unnecessary new capacities for pumping gas to the West? I think it's all about construction contracts. Excavation work and laying infrastructure are the tastiest pieces of government orders, not to mention kickbacks. Hence all the excitement around Nord Stream 2, Turkish Stream or Power of Siberia. The guys are digging the ground, the infrastructure is more expensive than gold.

Of course, many European companies will find themselves in a difficult situation, and not just those that help us build export pipelines. The sanctions essentially impose a ban on any investment in the Russian oil and gas sector. But this is not the main thing. Nobody needs Turkish Stream except Gazprom. The fact is that the Israelis have already begun laying their gas pipeline to Turkey from the Israeli part of the giant Leviathan gas field in the Mediterranean Sea. So Türkiye is in any case turning into a hub for supplies of Middle Eastern gas to Europe. The Russian “Stream” is not of such fundamental importance for her. The Israeli gas pipeline to Turkey will be ready next year.

About the future of the ruble

The new sanctions package greatly tightens the US position towards Russia. We were already largely cut off from global financial markets. The new sanctions make this cut-off final. If Trump signs a law on new sanctions (which there really is no doubt about), this, firstly, will kill the ruble, because investors will not be able to carry out carry trade operations ( borrow in stable currencies at low rates and invest in unstable currencies with high rates- approx. ed.) with Russian and government and corporate securities. These restrictive measures from the United States will simply destroy our financial market.

Secondly, serious problems will begin with replenishing the Russian treasury from gas and oil revenues. Therefore, I repeat: the new American sanctions are very serious and only stupid and short-sighted people can laugh at them.

In addition, what is even worse for the Russian economy is that now the sanctions regime against Russia is really here to stay. Neither Trump nor any other US president, according to the text of the new law, will be able to lift anti-Russian sanctions by his decision. The sanctions are now codified. This is the law, not decrees of the US President or decisions of the US Treasury. Now only Congress can lift sanctions.

A possible ban on the purchase of Russian debt will not cause damage to the American and Western banking system as a whole, since the volume of purely public debt in Russia is ridiculous. True, taken together with corporate debt, it exceeds $500 billion, but on a global scale this is quite a bit. For the West, there will be no damage from the ban on lending to Russia and our issuers, but this will hit the ruble very hard, given the upcoming payments on the debts of Rosneft, Gazprom and other state-controlled corporations. Typically, debt is refinanced, meaning new loans are taken out to pay off old debts. If the West refuses to lend to us at all, we will have to give up accumulated foreign exchange reserves to pay off the debt, and this will hit (and hit very hard) the ruble.

The problem will arise of the impossibility of financing a number of state programs due to a lack of funds in the Russian budget. Access to technology will be further limited. Corporate defaults are also possible. Our “favorite” oligarchs already have liabilities that exceed their assets, and this step by the US Congress only worsens the situation.

The ruble will fall first. However, this is not directly related to sanctions. The Russian currency should collapse in the near future and without tightening anti-Russian sanctions, since the market situation is negative for it. Markets will soon begin to fall and there will be a flight from risky assets, which include bonds of developing countries and their companies. Speculators entered into these risky assets with huge leverage ( purchase of securities using borrowed funds from brokers- approx. ed.). Soon the crowd principle will come into play when several players begin to dump ruble assets, deciding that the risk is already too great, and the rest will follow their example. Despite the fact that the dollar is verbally the most hated asset, speculators will run to dollars. I think the collapse of the ruble will begin in August.

The first targets of attack by speculators on the ruble are 97 and 125 rubles per dollar. It is difficult to say when speculators will hit these targets - this year or next. The exact time is not so important, the main thing is that the target indicators of the ruble exchange rate have been very clearly defined.

Moreover, the situation on the foreign exchange market is in no way connected with the presidential elections. And the Russian authorities, by and large, cannot influence it. The Central Bank does not have free money; our financial market is completely at the mercy of “hot” Western capital. We are mainly talking about the debt and foreign exchange markets. Analysts, of course, will talk about how they are holding the ruble exchange rate before the elections, or, on the contrary, talk about why the authorities did not keep the ruble from collapsing on the eve of the elections. But all this has nothing to do with real market processes.

The Reserve Fund has already been spent almost entirely, and the Fund for Future Generations has already been torn apart by 40 percent somewhere, that is, invested. Therefore, gold and foreign exchange reserves are no longer so large. especially if you compare the balances of these reserves with the total external debt - corporate and government. Everything that the Central Bank now has, if we also subtract the payment for imports that the country needs for 3-6 months, will not be enough to pay off even the majority of Russian debts. The Central Bank's liquid reserves are now 2 - 2.5 times less than the total external debt. The Central Bank is unable to ensure long-term stability of the ruble. There is simply no money for this. Hence the introduction of a floating exchange rate, which in practice means that at any moment the ruble can collapse by half.

About oil prices

Sanctions do not affect the oil market. If even the big mess in the Middle East - military actions in Syria, Iraq and even the added diplomatic war between the Saudis and Qatar - did not affect oil prices in any way, then what can we say about new anti-Russian sanctions. Their list does not include a direct ban on the import of Russian energy resources, which could probably keep oil prices from falling again.

Oil grew due to the actions of speculators, primarily due to an excess of dollar liquidity, due to “quantitative easing,” that is, pumping the Western economy with money. Events in the Middle East were only used by speculators as an informational occasion to further heat up the market and push prices up. But when the price of oil falls (again, for purely financial and even psychological reasons), political events cannot do anything about the fall of the market. The market simply does not pay attention to this so-called force majeure. It is not various political events that determine market movements, but market movements that determine our perception of these events.

Now oil is hovering around $50 per barrel, because such a hover always completes the correction in oil prices before a new fall. The oil market just took a pause before going down well - by 15 percent to 34-35 dollars per barrel ( now above $48- approx. ed.).

Moreover, there are no particular fundamental reasons for this. The main reason is half a million oil traders and the so-called wave theory of their behavior. After the fact, the fall can be explained by anything. For example, a slowdown in the global economy, a drop in demand for oil, or something else.

Even a real change in the dynamics of energy consumption does not affect the oil market in any way. A simple example: we all witnessed how the price of oil fell from $140 per barrel to $30 in less than a year. At the same time, the balance of real demand and supply for oil changed by a maximum of 2 percent. That's all. This balance does not affect market movements in any way.

But the price of oil will not remain at current levels. The cost of a barrel will fluctuate in the range from 30 to 60 dollars, I would say, until March 2018 (just before the Russian presidential elections, but this is pure coincidence). Then there will be a collapse in oil prices to 12 or even 9 dollars per barrel.