Vladimir Putin refused to cave into oil blackmail from Saudi Arabia

The state apparatus headed by President Vladimir Putin is confident that Russia will be able to sustain the price war in the commodity market more than Saudi Arabia, Forbes reports citing Bloomberg.

According to the agency’s sources close to the cabinet of ministers, the president will refuse to cave into “oil blackmail”, which will provoke a continuation of the confrontation, which negatively affects the world trading arena. Bloomberg analysts are convinced that the clash of former allies could plunge the cost of raw materials below $20. It is also known that Russia has been preparing reserves for several years to cope with such difficulties, but did not assume that Saudi Arabia would actually dare to provoke a war.

Many people from Putin’s inner network understood that a break with OPEC would cause a collapse in oil prices. The government has foreseen the fall to $20 and is ready to cope with the consequences. Among other things, Putin makes it clear that he does not refuse to cooperate with other oil-producing countries, but only on his own terms.

At the moment, the entire market is frozen in anticipation that at least one of the parties will decide to retreat and offer a truce.

The refusal of the Russian government to sign a deal with OPEC+ has already significantly affected the country’s economy: the ruble has weakened, the financial sector is approaching a recession, and the budget is preparing for a deficit. According to analysts of the publication, the government may have to resort to using funds from the National Welfare Fund. United States President Donald Trump noted that this confrontation is destroying not only the economies of Saudi Arabia and Russia, so that if necessary he will be forced to intervene. According to The Wall Street Journal, America plans to impose new sanctions against Russia to influence its decision. In response Dmitry Peskov, Vladimir Putin’s secretary, called the US measures “Russophobia.”

Alexander Dynkin, President of the Institute of World Economy and International Relations, told Bloomberg that the Russian president is known for his character. He also added that he had proved his readiness for a long confrontation in order to protect not only his image, but also the state. Before returning to negotiations, countries will have to try to do so in a way that does not harm their own reputation.