Oil began to fall. Are we buying promotions and currency?

by mid -June, the cost of oil Brent stopped growing and turned down. Last Friday, June 17, the price accelerated the decline and lost 5%per day. Why is this happening and what investment solutions are worth paying attention to. The price of oil unfolded quickly: more recently, it traded about $ 124, and today it is $ 113. And there are several reasons for this.

Improvement of the Fed. On June 15, the US Federal Reserve for the first time since 1994 raised the bet at once by 75 b.p. These measures are designed to restrain the record inflation over the past 40 years. The Fed notized that further tightening of monetary policy will be appropriate. Other largest central banks in the world have taken a similar position. Negative expectations. Against the background of tightening the DCP, investors expect a slowdown in the economic growth rate – the demand for energy resources will decrease. There are more suggestions. Oil exports from Venezuela began to grow, production increased in the United States. Joe Biden will visit Saudi Arabia, officially to visit an international conference. However, there is an opinion that the president The United States will agree that the Middle East Kingdom increases the volume of production.

in Russia is also expected to increase oil exports in 2022, as reported by the Ministry of Energy. “Oil export, we rather exceed last year’s indicators,” said the first deputy head of the ministry Pavel Sorokin.

What can be the consequences?

If the drop in oil continues, then the ruble will begin to weaken. There is a correlation between the assets, and most often it happens: oil is getting cheaper – the dollar is getting more expensive. Now The ruble was significantly strengthened in relation to the dollar, reaching the values ​​of 2017-2018. This was influenced by the actions of the Central Bank and the Government of the Russian Federation, as well as the collapse of imports. A direct correlation between the ruble and oil is not always traced, but it is clearly visible at a long distance. Now, with the cost of the dollar, about 56 rubles, the price of oil is about 6400 rubles. If you allow the reduction of oil to $ 90, in case of unchanged course, then in rubles it will go to 5000, which is noticeably lower than the average cost recently.

with such a drawdown, oil exports will become Less profitable, which means, the government will have to take additional measures to weaken the ruble. Otherwise, there are problems for the budget, which risks again becoming scarce. To weaken the ruble, power can reduce currency control, change the mechanism of the budget rule, invest in the economy and establish imports.

due to sanctions, logistics chains were injured and caused a drop in imports in the country. This was one of the reasons for strengthening the ruble, as the demand for the dollar has decreased. Import It includes both consumer goods and components necessary in production – which is why it is important for the economy and exchange rate.

First Deputy Prime Minister Andrei Belousov said that imports in the Russian Federation were doubled compared to February indicators. Now it has recovered by 65-75% of the February indicators, but so far significantly less than the dosancation volumes. “Of course, this is not the limit, it is necessary that imports grow. But it is necessary to understand that import is not only a question. This is a matter of internal demand. There is no demand-there will be no import, there will be no import, respectively, there will be additional pressure on the ruble in the direction of its strengthening, ”he added. Belousov noted that the optimal exchange rate is 70-80 rubles per dollar, and the authorities are already working on achieving achievement this indicator.

What to do to investor

so, if the oil continues to fall, the authorities will have to take further actions to weaken the ruble. In this situation, the investor has two opportunities for earnings.

, while buying a currency so far She did not begin to weaken. This is the easiest investment option, and there are opportunities not only in the dollar, but also other alternative currencies like euro or yuan. Read more about such currencies in our separate material. Do not forget about foreign exchange shares and other assets – with their help you can increase profitability and protect yourself from inflation. Invest in sagging shares of mining companies. In addition to oil companies, it can be coal miners and metallurgists – they benefit from the potential reduction of the national currency.

so, shares may be interesting:

swords AO (buy, 410 rubles) Gordadskaya (buy, 390 rubles) russal (buy, 120 rubles)

they have a greater sensitivity to the exchange rate. Sales risks for them are quite small. The main export partner has Asia in Mechel and Goidfidskoy. And Rusal is a key supplier of aluminum to Europe, and the company has already passed the conditional “check” with previous sanctions, plus in the future of the year we expect a good dividend history in all companies.

important point: the effect of the growth of the USD/RUB course allows not only to protect against the weakening of the ruble in the shares of metallurgists, but also to count on the multiplier effect. The fact is that the expenses of companies are incurred in rubles and are not dependent on the course, which means that the growth of export revenue leads to an even greater increase in profit. Therefore, the increase in the price of shares as a percentage can be greater than the scale of the weakening of the ruble.