Press review: Russia, Saudis wait for US to cut oil output and COVID-19 to hit Russian GDP / News / News agency Inforos
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Press review: Russia, Saudis wait for US to cut oil output and COVID-19 to hit Russian GDP

Press review: Russia, Saudis wait for US to cut oil output and COVID-19 to hit Russian GDP

Top stories in the Russian press on Monday, April 6, prepared by TASS

Vedomosti: Russia and Saudi Arabia wait for United States to cut oil output

Global oil demand fell by about 10-15 mln barrels per day and in the next few weeks it may drop to 15-20 mln barrels per day — about 20% of the world’s total production — due to the coronavirus pandemic and the failure to extend the OPEC+ deal. Now, the OPEC+ members’ ministers intend to discuss the issue of containing oil production again. A federal official told Vedomosti that the meeting is likely to be held on April 9 via teleconference.

Russia hopes that the United States will join the deal, the newspaper wrote. Saudi Arabia is also ready for a significant drop in production if Russia and the United States make cuts. However, antitrust laws could prohibit the United States from participating in the cartel. OPEC unites not oil companies, but sovereign states, legally it is a supranational international organization, Pavel Ikkert, a partner at the law firm Nafco, told Vedomosti. Numerous large and relatively small companies are engaged in oil production in the United States, making it difficult to implement any measures to cut domestic production.

If the deal to reduce production by 10 mln barrels happens, it will be a miracle, Fitch’s Dmitry Marinchenko told the newspaper. But such a decline will have a greater psychological effect, since the oil market’s imbalance will not be completely eliminated, BCS Premier Senior Analyst Sergey Suverov said.

"The scale of Russia’s cut will depend on whether the United States joins the deal. But approximately, the volume of reduction can reach about 1-1.5 mln barrels per day," he said. "This is a lot for the Russian oil industry, and the reduction process may drag on for several weeks or even months," the expert added. It may be technically difficult for Russian companies to quickly cut production so that they can recover later, once demand rebounds, capital investments may be needed, Marinchenko noted.

Kommersant: Red Cross chief calls coronavirus pandemic a stress test

The coronavirus pandemic has changed the world through apparent physical and psychological strain on the general population to having far-reaching uncertain economic consequences. In this situation, strong states and legitimate authority are needed, President of the International Committee of the Red Cross (ICRC) Peter Maurer said in an interview with Kommersant. He believes that the pandemic can teach the global community to adapt to unforeseen circumstances and cooperate in the face of a universal threat.

Maurer believes that the coronavirus situation is really extraordinary and serious, but he would not call it unprecedented. If you stop paying attention to chronic diseases, to other infections that have not gone anywhere, you simply transfer resources from one problem to another. We need to look at health systems as a whole, he insisted.

In order to fight this particular pandemic and provide people with timely and high-quality medical care, strong states and legitimate authority are needed, he told Kommersant. On the other hand, this is too serious a problem to deal with it alone. To carry out all the necessary research, countries need to unite, share experiences and take common measures, Maurer believes.

A multilateral research format for the development of pandemic medicines and vaccines should be created, a format with the participation of states and other interested parties such as large international corporations that can conduct relevant research, along with the scientific community and humanitarian organizations, he noted. Governments need to share their experiences, disclose what works and what doesn't, so that some kind of impartial assessment can be made.

Maurer believes that the current situation is a huge stress test. Such crises should be used as an opportunity to understand that the world can change and people must change with it, and look for new ways to move forward, he added.

Meanwhile, the Red Cross continues to face the same problems in conflict zones. The situation in the Middle East, Africa, and Afghanistan is already difficult due to war and violence, and the pandemic is only worsening the conditions. Governments around the world are taking restrictive measures, and that impedes the organization’s activities, Maurer noted. The current situation also has a profound impact on the economy, since it could prevent the organization from raising funds.

Izvestia: Russia’s GDP to suffer in 2020 due to non-working holiday

The Russian economy may lose 3%, or 3.3 trillion rubles ($43 bln) by the end of 2020 and the recession will last for several quarters due to the non-working month of April, according to experts interviewed by Izvestia. The expert community believes that the country will face a recession over several quarters, with the service, transport, tourism, construction, and financial sectors being hit the hardest. However, analysts emphasized that the world economy will slow down even more, and in 2021 economic growth will return to Russia.

Extending the non-working holiday until the end of April significantly increases the risks of an economic recession and a decline in the population’s well-being, chief analyst at BCS Premier Anton Pokatovich told Izvestia. In addition, the lockdown combined with a decline in income, will sharply reduce aggregate demand. Thus, the ‘cost’ of the non-working holiday to the economy may amount to about 3.5-6 trillion rubles ($45 bln-$78 bln), or 3-5% of GDP, according to the results of the month. The year-on-year decline will reach 2.5-2.6%, the expert believes.

At the same time, the global economy’s losses under an adverse scenario of the spread of infection will be even greater than Russia’s, therefore a slowdown by the end of the year is inevitable, Director of the HSE Center for Business Tendencies Studies Georgy Ostapkovich told the newspaper. Russia is more autonomous and isn’t very dependent on global value chains, so today that is a plus, the expert noted.

The transportation sector, which accounts for 10% of the population’s total spending, will be hit the hardest by falling demand, Gazprombank noted. Spending on leisure, clothes and shoes will also be reduced. The summer season is a big question, so the tourism and leisure sector will be hit hard, predicts Anton Tabakh, director of macroeconomic analysis and forecasting at Expert RA. In addition, even the wedding industry, the beauty and fitness spheres, and restaurants that fail to adapt to the new reality will suffer greatly.

Izvestia: Scientists call for creating plasma bank in Russia from coronavirus recoveries

A center for collecting donor blood plasma from patients who have recovered from COVID-19 needs to be set up in Russia, though the coronavirus epidemic in the country is not as widespread as in some other parts of the world, experts interviewed by Izvestia believe. Such a center has recently been opened in the United States, where the number of infected people is 58 times greater than in Russia. The plasma transfusion technique for ill patients was approved at an accelerated pace by the FDA (the Food and Drug Administration).

"This is very necessary, the method of plasma transfusion meets expectations, and the risk of its use is equal to the possible benefits," Pavel Volchkov, director of the laboratory of genomic engineering department at the Moscow Institute of Physics and Technology, told Izvestia. However, in order to properly collect the material, at least five different tests are needed, he added.

Head of the infectious diseases department at H-Clinic at the RUDN University Danila Konnov, agrees with the need to set up such a center. "Since there is still no effective remedy for COVID-19, any treatment that has shown its effectiveness should be investigated and, possibly, used on severe patients," he insisted.

The development of the epidemiological situation will show whether this method will be needed urgently or not, the scientist noted. But organizing a massive plasma sampling and its preparation under the current lockdown conditions will not be easy. Another difficulty is that in Russia there are fewer people with confirmed coronavirus cases and recoveries, he added.

Kommersant: Group relaunches ICQ messenger

Amid a sharp increase in the popularity of video calls, a renowned Russian IT company, Group decided to relaunch and rebrand its ICQ messenger with a focus on group communication. The company has been running the messenger since 2010, and since 2017 it has also developed the TamTam messenger, but both are inferior to WhatsApp, Viber and Telegram in terms of audience in Russia. Experts told Kommersant that the time for the relaunch is perfect, but it is unlikely that the updated ICQ will become a significant source of revenue. Group has developed the ICQ New messenger based on the original ICQ, the company told Kommersant. It has been available in application stores since April 6 and is installed by updating the existing messenger. ICQ New is supplemented by artificial intelligence technologies that are used for quick answers based on context, and will be able to automatically decrypt voice messages, and will focus on group communication, the company noted. Group with a total monthly audience of over 80 mln users has an inexpensive channel for attracting an audience to its new ICQ, FinSight Ventures managing partner Alexey Garyunov told Kommersant. The company chose the right time to restart. Telegram is facing a lawsuit in the United States due to plans to release cryptocurrency and audiences have a growing need for video and voice conferences amid the pandemic, he said.

However, it will not be easy to compete with industry leaders globally, in particular in the Russian market for ICQ New, a source in the communications services market told the newspaper. It may have a chance if the company decides to make ICQ a messenger for a niche audience, the source believes.

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