Russia: in for a crude awakening

The annexation of Crimea is irreversible. But the West appears determined to curtail any further Russian encroachment, into Ukraine or more broadly. Sanctions targeting Putin’s clique might have been limited but they are biting, and there are further economic weapons in the arsenal, specifically oil prices. These could be engineered lower by drawing on the US Strategic Petroleum Reserve, robbing the Russian government of key export and budget revenues, adding to pressure on the economy which is already teetering on the brink of recession. The sustainability of the bounce in Russian equities is questionable in this light and we remain short. The rouble also needs to weaken further and we would stay short versus the US dollar.

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