Gazprom Neft unaffected by Urals crude price decline
Gazprom Neft is not overly worried about the recent drop in Urals crude prices, according to CEO Alexander Dyukov. He described the current price as "quite acceptable" due to the strengthening ruble, which helps ease the impact of lower oil prices on the company's profits. Urals crude has faced challenges, including oversupply, declining demand, and changing global politics. As of March 18, the price for Urals crude is just above $65 per barrel, the lowest since October. In contrast, the ruble has risen to 81.5 rubles per dollar, its strongest value in nine months. A stronger ruble means Gazprom Neft receives fewer rubles when converting oil revenue from dollars. However, most of the company's expenses, such as wages and taxes, are in rubles. This dynamic helps offset revenue losses, making operations less costly. The ruble's rebound has been influenced by seasonal factors and renewed optimism in Russian financial markets, partly linked to the recent U.S. political landscape. Market speculation about changes in sanctions and trade ties has contributed to the ruble's strength against the dollar. Dyukov also highlighted the ongoing importance of OPEC+ in balancing oil supply and demand. The alliance meets monthly to set production quotas, which Gazprom Neft will follow based on directives from Russia's Energy Ministry. For now, the strong ruble keeps Gazprom Neft in a positive position, even as oil prices remain low. However, if the ruble continues to strengthen while oil prices struggle, Russia's Finance Ministry could face challenges, as a strong ruble might reduce government revenues.