The drop in crude prices weighed on China’s economy, a nation that ranks behind the United States and Europe in oil consumption. In July, industrial output rose by 3.7 percent from the previous July, though a 4.4 percent gain had been forecast. After the numbers were published, Brent crude slid about 1.5 percent in early trading on Tuesday evening, with further declines of more than 0.7 percent on Wednesday. By 15:08 Moscow time, Brent had rebounded from the slide, with bids above $85 a barrel.
Analysts noted that speculative trading around disappointing Chinese production data helped fuel the oil price dip. Still, they argued the moves were not alarming. If Brent were to fall into the $60–$70 range, that would be concerning, said Igor Yushkov, a leading analyst at the National Energy Security Fund quoted by Gazeta.ru.
Yushkov projects Brent in September to move within an $80–$85 band. Ronald Smith, Senior Analyst at BCS World Investment, sees Brent around $85 in the October–December quarter, before easing to roughly $75–$80 in 2024.
Sovcombank’s chief analyst Mikhail Vasiliev expects Brent to average $82 for the third quarter, with Ural oil averaging about $68. He also forecasts a fourth-quarter Brent at $77 and Urals at $63. The Russian Finance Ministry noted that average Ural oil prices topped $70 per barrel from mid-July to mid-August.
What will drive oil prices?
Experts say the US Federal Reserve is unlikely to hike rates soon, while OPEC+ supply decisions have already been signaled. The likely trading range for Brent is $80–$86 a barrel, with most expectations centered on $80–$85. Higher rates slow the economy, raise borrowing costs for businesses, and can dampen energy demand, which tends to push prices lower. As a result, the market often eases when the US central bank tightens policy, explained Yushkov.
Oil prices will also hinge on demand from China and supply actions by Saudi Arabia and other OPEC+ members. If China’s economy continues to recover from the pandemic and industrial activity accelerates, demand for crude could rise. Stanislav Mitrakhovich, a colleague at the National Energy Security Fund and an expert at the University of Finance under the Russian Government, echoed that view, noting that increased industrial output and air travel could support price gains. The question remains whether OPEC+ will prolong current production cuts into October.
Saudi Arabia initially set a voluntary reduction of 1 million barrels per day for July, with extensions through August and September. If Brent stays above $85 in September, Riyadh could begin increasing volumes again, though OPEC+ quotas are expected to hold steady for now, according to Yushkov.
How has OPEC+ adjusted output?
In June, OPEC+ agreed to trim total oil production by 1.4 million barrels per day to 40.46 million bpd starting in 2024. The alliance includes Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Sudan, and South Sudan. By year-end, the group had reduced output by about 2 million bpd to roughly 41.856 million bpd, with the aim of stabilizing the market and creating long-term predictability.
For context, OPEC data show that Russia cut about 300,000 bpd in March. In spring, Russian output hovered near 9.7–10 million bpd, with reductions continuing into the summer. Deputy Prime Minister Alexander Novak later stated that Russia was trimming by about 500,000 bpd relative to February levels. The broader pandemic-era cuts from May 2020 were fully unwound only gradually, with new reductions in 2022 and 2023 intended to maintain market balance. Critics from the White House contended the move signaled solidarity with Russia.
Mitigation and recession fears in the West could also push oil prices lower, Mitrahovich suggested.
Rubles and oil revenue
Vasilyev discussed how oil prices influence Russia’s income and the broader economy. On one hand, rising prices and a weaker ruble boost export revenues. On the other hand, ongoing production cuts under OPEC+ limit revenue growth. In August, Russia plans to reduce exports by 500,000 barrels per day and by 300,000 bpd in September. This pattern, combined with strong demand from China and India, is expected to keep Russian crude exports around $7.1 billion in September, matching August figures.
Oil exports remain a top source of foreign currency for Russia. Looking ahead, higher Brent prices could provide some ruble strength, with a typical lag of two to three months before export revenues translate into currency gains. If Brent remains above $80 in July, a favorable impact on the ruble could materialize by September and October, Vasilyev noted.
He projected the ruble trading around 90–100 per dollar in September, with a baseline dollar value near 93 rubles, the euro around 105 rubles, and the yuan near 13.2 rubles. The main risk remains the volume of oil and gas exports, since a decline there would erode the currency’s strength. For investors, Vasilyev recommended watching oil-company shares for potential upside and suggested government bonds as a conservative hedge. OFZ yields were cited around 10–11 percent by the analyst.
Overall, the market’s direction will likely hinge on how OPEC+ balances production with demand, how China’s recovery progresses, and how the United States negotiates inflation and monetary policy. The oil market remains sensitive to geopolitical signals as well as currency dynamics that affect export revenues and inflation in Russia and beyond. [Citation attribution: Market analysts at the National Energy Security Fund and corroborating economic briefings]