OPEC+ oil deal lifts rouble but raises economic concerns

• Oil prices ended Thursday's trade lower before a market holiday on Good Friday, with Brent, a global benchmark for Russia's main export, shedding 2.47pc to $32.03 a barrel.
• The rouble was 0.6pc stronger against the dollar at 73.87, moving away from its weakest level since early 2016 of 81.97 hit in mid-March.
• The rouble is still far from levels of around 64 seen before the global sell-off triggered by the accelerating coronavirus pandemic began in February.

MOSCOW: The rouble firmed on Friday, consolidating a recovery from recently-hit four-year lows after a global decision to cut oil production was set to support prices, although it could also have an adverse impact on the Russian export-focused economy.

The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, agreed on Thursday to cut output by 10 million barrels per day from May, roughly 10pc of the world's supply before the coronavirus outbreak hit the global economy.

If fully observed by Russia, the deal could add to pressure on the country's economy, which is already being hit by a partial lockdown across the country in an effort to contain the coronavirus outbreak, potentially leaving millions of people unemployed.

Oil accounts for 25pc of Russia's overall exports of goods and services, meaning that together with a decline in gas exports, the deal may cost some 2 percentage points of gross domestic product this year, said Dmitry Polevoy, chief economist at the Russian Direct Investment Fund.

But without the OPEC+ deal, the impact of low oil prices could have been worse. Urals, Russia's blend of crude oil, fell below $42 per barrel, the level factored into this year's budget, in early March to $10.88 in early April, a level last seen in 1999.

Oil prices ended Thursday's trade lower before a market holiday on Good Friday, with Brent, a global benchmark for Russia's main export, shedding 2.47pc to $32.03 a barrel.

Expectations that the deal would be reached have already lifted oil prices from the multi-year lows seen last month, offering some support to Russia's oil-dependent economy and the rouble.

At 1118 GMT, the rouble was 0.6pc stronger against the dollar at 73.87, moving away from its weakest level since early 2016 of 81.97 hit in mid-March.

The rouble is still far from levels of around 64 seen before the global sell-off triggered by the accelerating coronavirus pandemic began in February.

Versus the euro, the rouble was 0.4pc firmer at 80.86 .

Central Bank Governor Elvira Nabiullina is due to hold a weekly briefing at 1300 GMT on measures that Russia is taking to withstand financial shocks caused by the coronavirus outbreak, which has pushed the economy to the brink of recession.

Russian stock indexes slipped after rising on Thursday.

The dollar-denominated RTS index was down 1.7pc to 1,136.3 points. The rouble-based MOEX Russian index was 1.4pc lower at 2,665.1 points.

Shares in Russia's largest lender Sberbank were down 1pc on the day at 201.67 roubles after the finance ministry closed a deal to purchase a controlling stake in the lender from the central bank for 2.14 trillion roubles ($28.31 billion).