Oil market and coronavirus

Crashing oil prices are one of the most discussed topics these days, and many try to understand why does it happen and what are the effects. To Russia, that is largely dependent on high oil prices, the current situation is especially worrisome. The solid prices are the lowest in 20 years (and on Monday American WTI oil even had a negative price of -37 US dollars), and the ruble has been dropping for more than a month now, and the coronavirus outbreak does not help the economy either. Professor Tynkkynen has been approached by several media outlets to comment on the recent developments, and here we have collected his interviews.

Firstly, Professor Tynkkynen appeared today in the Ykkösaamu programme on Yle Radio 1, the interview starts at 52:41.

Secondly, Veli-Pekka Tynkkynen’s comments can be read in today’s Kauppalehti article, titled “Kaoottinen öljymarkkina iskee rumasti” (The chaotic oil market lunges nastily). For instance, talking about Brent’s price decline, Professor Tynkkynen said

that oil will be bringing tax rubles to President Vladimir Putin’s government as long as the price remains above $ 15 a barrel. If the price falls below $ 15, the Russian economic crisis will worsen.

Thirdly, Professor Tynkkynen’s comments on Russian National Wealth Fund can be found in the MTV news. This fund accumulated extra oil and gas revenues for 12 years, now has more than 120 billion US dollars and in theory, can be used for supporting Russian citizens during these difficult times. However, as Professor Tynkkynen states

– There are significant buffer funds in Russia. It is a fact that in recent decades, public investment has not gone to the social and health sectors but to the energy sector and the construction of military equipment How Russia can take care of the well-being of its citizens is a big social question, Tynkkynen says.

If Russia’s social- and healthcare cannot withstand the corona pandemic, the people may be even more angry at their government.

– In recent days, there has been criticism of the Putin administration in the Russian media. Even in the media, which has been very sympathetic to the administration, there is criticism of the fact that in recent decades Russia has invested in supporting the fossil energy sector and building security and military equipment, and not in improving the social and health sectors, Tynkkynen says.