The timing could not have been worse for Russia to provoke a spat with Saudi Arabia over oil production quotas in early March. Moscow’s decision to withdraw from the OPEC+ agreement restricting oil production in order to maintain higher oil prices triggered a harsh reaction by Riyadh that sent oil prices spiraling down to below $25 per barrel in the midst of the coronavirus pandemic (Oilprice.com, March 24). The price of Russian Urals oil dipped even lower, under $19 on March 18, which will deprive the Russian budget of some $3 billion a month (Vedomosti, March 19).
The Russian economy is likely to suffer the most devastating consequences of the oil price war – just as it bore the heaviest impact of low global oil prices five years ago. This time around, however, the injury is self-inflicted, as an angry Saudi Arabia not only decided to ramp up production but also moved to grab Russia’s oil market share around the world (see EDM, March 19, 23).
On March 6, Russia’s Energy Minister Aleksandr Novak declined to accept new oil production quotas after April 1 when the current OPEC+ deal expires (Oilcapital.ru, March 10). The move targeted primarily debt-burdened U.S. shale oil companies, which were already under pressure by the advancing COVID-19 pandemic. Moscow has long resented that the U.S. oil sector has continued growing unobstructed by cartel policies and has steadily overtaken Russia and Saudi Arabia as the world’s leading oil producer. Russian energy officials took advantage of the coronavirus spread globally to deal a blow to indebted American shale oil producers who need an oil price above $40 a barrel to remain solvent (Asia Times, March 18).
But Moscow also needs an oil price above $40 to balance its budget (Lenta.ru, March 11), for which oil and natural gas revenues make up to 40 percent. The current budget is calculated at an oil price of $42 per barrel (Interfax, March 1), and that, combined with foreign currency reserves of $570 billion, could indeed provide a cushion – but only in the short term. A sizeable foreign currency reserve helped prop up Russia’s budget when the Organization of the Petroleum Exporting Countries (OPEC) drove oil prices down in 2014, targeting oil companies in the United States. The drop in oil prices then overlapped with the Western-imposed sanctions against Russia for invading Ukraine. The budget, calculated at an oil price of $96 per barrel at the time, had to be revised when oil prices dropped to $45 and revenues decreased by $160 billion, one third of Russian overall exports (Cbr.ru, May 2015, accessed March 25, 2020). Social spending programs had to be put on hold until oil prices recovered a few years later, resulting in increased social protests in 2018 and 2019 (Kommersant, June 22, 2019).
Today, Russia is in a much riskier situation as its long-term financial stability is threatened if oil prices do not recover. The Kremlin evidently did not expect that its disagreement with Saudi Arabia would lead to a plunge below $20 per barrel. Officials are now playing down the long-term impact on the economy. Russia’s Finance Minister Anton Siluanov has said he is not concerned about the fall in oil prices, because Russian oil companies have recently accumulated a large safety cushion (RBC, March 20).
If a price agreement is not reached soon, however, Russia’s prospects would be grimmer than in 2014–2015, because oil prices are 50 percent lower, Western sanctions remain in effect and new ones were introduced, and global oil demand has shrunk due to the coronavirus pandemic. In addition, Saudi Arabia has been successful in snatching some of Russia’s markets, including an oil purchase deal with Azerbaijan’s State-Owned Oil Company (SOCAR) (Ona.az, March 13). Not surprisingly, Moscow quickly settled price negotiations with Minsk and agreed to sell crude oil to Belarus at a significant discount of $15.70 per ton (Tut.by, March 23; see EDM, March 24).
In the meantime, Russian oil companies have started revising their investment plans due to the collapse of oil prices. Lukoil was the first to admit it will have to cut investment by $1.5 billion, mainly for new projects. Its vice president, Leonid Fedun, said that with oil prices below $35 per barrel, oil production in Russia will begin to decline from 2022–2023 (Kommersant, March 20).
It is becoming increasingly clear that if oil prices do not recover, President Vladimir Putin is unlikely to deliver on his promise to increase social spending. The plan, announced in Putin’s annual State of the Nation address on January 15, includes 4.1 trillion rubles ($65 billion at the time of the address) in social spending by 2024 to assist the poor, increase pensions, help families and boost the national birth rate (Kremlin, January 15).
The period of economic hardship coincides with President Putin’s attempt to secure his position as de facto president for life, after he initiated changes to the Russian constitution (see EDM, January 16, March 16, 19). The authorities scheduled a nationwide constitutional plebiscite on the amendments for April 22, but this was subsequently delayed amid the coronavirus pandemic (Meduza, March 25). The COVID-19 outbreak in Russia and several weeks of inept or counterproductive government response – the authorities have been habitually hiding the facts and arresting activists who report on coronavirus cases – are making Russian citizens even more anxious. Putin suspended work for all non-essential laborers from March 28 to April 5 in an effort to curb the infection (Meduza, March 25). The pandemic will undoubtedly take an additional financial and social toll in a time of decreased oil revenues.
By Margarita Assenova via Jamestown Foundation
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NL Unemployment Rate Up Slightly in June – VOCM
The unemployment rate in Newfoundland and Labrador rose slightly last month to 16.5 per cent from 16.3 in May. Nationally, the rate stood at 12.3 per cent.
Alberta is second-highest among provinces at 15.5 followed by PEI at 15.2, Nova Scotia and BC at 13.0. New Brunswick is below double digits at 9.9 per cent.
No new COVID-19 cases reported Saturday as N.L. passes 20K people tested – CBC.ca
One day after the province’s first new positive case in 43 days, Newfoundland and Labrador is reporting no new cases of COVID-19 Saturday.
According to a news release from the provincial government, the province’s total caseload remains at 262, with 258 people having recovered from the virus. There have been three deaths.
The province crossed 20,000 people tested as of Saturday, as 20,175 people have been tested — a jump of 205 in the last day.
On Saturday, the province provided an update on its first new case of COVID-19 since May 28.
The case is related to recent travel from the United States, and involves a man in his 50s in the Eastern Health region. The government reported Friday that the man did not travel through the Atlantic provinces during his return to the province.
In Saturday’s news release, health officials say contact tracing around the new positive case has been completed, with everyone considered a close contact testing negative for the virus. Close contacts of the man have also been advised to quarantine.
Government added the man was not symptomatic during travel and followed the province’s self-isolation protocol. As a result, they say risk to the public is low.
The latest COVID-19 information will continue to come via emailed statements on all days except Wednesdays, as the province’s COVID-19 media briefings have been scaled back to once a week.
How to uncover unclaimed money that may belong to you
Strapped for cash during the COVID-19 pandemic due to the economic slowdown? You might have unclaimed money from your past that could help pay the bills — perhaps from a dormant bank account or a lost cheque.
Or maybe a rich relative died without a will and — unbeknownst to you — you’re entitled to their money. A $1.9 million inheritance is currently sitting idle in B.C., waiting for the next of kin to claim.
To find out if you’re a millionaire or if you have any other unclaimed funds, here are some free, simple ways to launch your treasure hunt.
Uncashed CRA cheques
The Canada Revenue Agency is sitting on about $1 billion from cheques for tax refunds and benefits that taxpayers never cashed.
In some cases, the recipient may have lost the cheque or neglected to tell the CRA that they had moved, so it was mailed to the wrong address.
In February, the CRA added a new online feature to help unite taxpayers with their uncashed cheques — which never expire.
After logging onto your CRA account online, click on the “uncashed cheques” link. That will prompt a list of any CRA cheques in your name that have remained uncashed for at least six months.
To claim your money, fill out a form provided online and send it to the agency.
The CRA reports that between Feb. 10 — when it launched the new feature — and the end of May, Canadians redeemed more than 260,000 uncashed cheques totalling $63.7 million.
Dave Hurley of Vancouver clicked on the “uncashed cheques” link in April and was surprised to discover he had a $88.50 cheque for a 2007 GST/HST credit.
He said he made a claim and the CRA deposited the money into his account about a month later.
“An extra 88 bucks was good — it was great to have,” said Hurley, who used the money to splurge on a high-end bottle of Scotch whisky.
“I felt I deserved it.”
Central bank has $888 million in unclaimed funds
The Bank of Canada can also help you locate forgotten cash. When federally regulated banks have unclaimed customer funds — such as bank deposits, GICs and money orders — they wind up at the Bank of Canada after a 10-year period.
The bank calls the forgotten money “unclaimed balances,” and you can search its online database to find out if any of it belongs to you. To stake a claim, you must fill out a claim form provided online and mail it to the bank with proof of ownership.
The Bank of Canada said it paid out $8.5 million last year to Canadians who submitted claims.
And it has plenty more to dole out. The bank reports it was sitting on $888 million in unclaimed balances at the close of 2019. Its single-largest holding totals more than $800,000.
Rightful owners have ample time to claim their cash. The bank will hold unclaimed balances of less than $1,000 for 30 years and amounts of $1,000 or more for 100 years.
Forgotten EI cheques
Employment and Social Development Canada (ESDC), which oversees federal social programs, may also have cash for you. The government department reports that as of Sept. 30, 2019, it was sitting on $133 million from more than 300,000 cheques issued to Canadians that — for some reason — were never cashed.
The majority of the cheques belong to people who have at some point collected Canada Pension Plan, Employment Insurance or Old Age Security payments.
ESDC doesn’t have an online search tool, but you can call Service Canada if you believe you have a forgotten cheque. If it turns out you do and you’re able to validate your identity, the department will reissue the cheque.
Unclaimed property programs
The programs collect funds from provincially regulated companies, organizations and financial institutions. Depending on the province, collected funds could include wages, insurance and pension fund payments, as well as accounts from credit unions.
All three programs collect unclaimed inheritances left by people who died and no rightful heir can be found.
WATCH | Personal finance experts offer advice to Canadians:
“You can’t believe what people forget [about] and for what dollars,” said Alena Levitz, executive director of the BC Unclaimed Property Society (BCUPS).
The BCUPS reports it returned $2,744,595 in unclaimed cash last year to verified owners. It currently has more than $164 million in its coffers waiting to be claimed.
The total includes that $1.9 million left by someone who died in B.C. without a will.
“Somebody was a good saver all their life and just didn’t have [close] family and unfortunately, probably didn’t think to do a will,” Levitz said. She couldn’t divulge more details about the case for privacy reasons.
BCUPS imposes no time limit to make a claim and has cash still waiting for its rightful owners dating back to the 1800s.
Levitz encourages other provinces to establish an unclaimed property program. Currently, residents of provinces without one must make inquiries to individual businesses and organizations to seek out forgotten cash.
“It should be easy for folks to find money that belongs to them,” she said.
New Brunswick has an unclaimed property program in the works.
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