Russia, which pumps more oil than Saudi Arabia, is reaping a windfall from the steep rise in global energy prices resulting from instability in oil regions of the Middle East and North Africa. Riding the high oil prices, the Russian ruble has risen faster againstthe dollar this year than any other currency, which is helpful because it will curb consumer inflation during an election year. But the Russians could not step in to offset any potential big drop in global production, because Russia does not have any oil wells standing idle that would allow it to increase production. Right now Russia is pumping oil at its top capacity.
History Russian Pipelines
But at last week’s closing of $114, the price of each of those barrels of Ural crude, the country’s main export blend, has risen 24 percent since the beginning of the year. Last week, the prime minister, Mr. Putin, sat down for a televised meeting with Russia’s finance minister, Aleksei L. Kudrin, which was nationally televised on state news channels for the public’s enlightenment as the two discussed, just short of gloating, the benefits to Russia of a global oil panic. Russia, of course, does not have to look back farther than 2008 to see that a spike in the price of oil can be just that — followed by a dizzying drop. But for now, Russian energy is in favor. Russia’s perceived stability was a reason the French energy giant Total cited last week in agreeing to buy about 12 percent of an independent natural gas producer in Russia, Novatek, and join a liquefied natural gas project in the Russian Arctic.
“The upheavals taking place in a number of the oil- and gas-producing countries now send a signal to investors to come to Russia,” Total’s chief executive, Christophe de Margerie, said in a meeting with President Dmitri A. Medvedev announcing the deal. Oil experts say that because global production capacity for oil is still far larger than world demand, the run-up in prices is being fueled by fear more than by reality. The concern is that the violence in Libya could spread to other member states of the Organization for the Petroleum Exporting Countries, which are primarily Arab nations. Russia is not only outside OPEC, and thus free from the cartel’s production restraints, but also, with its formidable secret police apparatus and a population bulge among the elderly rather than the young, is seen as less vulnerable to an outbreak of social unrest. Russia has long jockeyed against Saudi Arabia, a member of OPEC, to be the world’s top oil-producing nation. Although the Saudis have more production capacity and vastly more reserves, Russia is pumping more oil.more