[red-beard]

Originally Posted by jyl

I'm going to make a guess. Putin will talk very tough to domestic audiences. His flunkies will quietly try to descalate the flashpoints in Ukraine, Crimea, etc. He knows how vulnerable his economy is. He also knows his reserves aren't really $450BN, they are more like $300BN, have dropped almost $100BN in the past year, and will drop around $200BN by end 2015 of the situation continues.

There is danger of a mistake, or an unforeseen contagion, probably through the European banking system, or a rogue actor - like the Ukranian rebels who shot down the airliner, which really turned Western Europe around on sanctions.

It really doesn't matter if the West relaxes sanctions now, not that it will. With oil down here, western banks will not lend to Russian companies anyway, and the ruble has basically tracked oil.

His enemy now is the Saudis. How long will they keep pressing oil price down. I heard a shale oil producer (Rosetta?) said they are slashing new drilling for 2015 but expect their oil production to go up a bit in 2015 anyway, because they have such a backlog of wells that have been drilled and can be put into production at relatively low cost. If they are representative, then Saudi may need to hold oil price low well into the back half of 2015 before seeing a supply contraction. Saudi can live with $50-60 oil for a very long time, many years. If oil stays there for all of 2015, Russia may be on its knees and Venezula, etc will be on their back. Life will really suck for a small part of the US but for the US, China, Europe, Japan overall, it will be a stimulus.

Not as much as you may think. One issue is that many countries rely on oil for government spending. With that, they will do what they can to increase production. Mexico comes to mind.