Business news from Ukraine

JPMORGAN ANALYSTS: IF RUSSIA CUTS SUPPLIES, OIL COULD SOAR TO $380 PER BARREL

Oil prices could soar into the stratosphere and reach $380 per barrel in a worst-case scenario in which Russia cuts fuel supplies in response to Western sanctions, J.P. analysts predict. Morgan Chase & Co.
The Russian Federation can afford to cut production by 5 million barrels per day without causing excessive harm to the economy, Bloomberg quoted bank analysts as saying. Moscow may take such a measure due to various possible measures by the West, including imposing a ceiling on the price buyers pay for Russian oil.
At the same time, the consequences of such actions for the rest of the world will be catastrophic. A 3 million bpd production cut would push Brent oil prices up to $190 per barrel, while in a worst-case scenario, if production falls by 5 million bpd, prices will soar to $380 per barrel, experts say.
“The most obvious and likely risk associated with imposing a price cap is that Russia may decide not to participate in this scheme and instead retaliate by cutting exports,” the analysts wrote. “It is likely that the government may retaliate by cutting production to harm the West. The lack of supply in the world oil market is playing into the hands of Russia.”
September futures for Brent crude on the London ICE Futures exchange by 10:23 Moscow time are trading at around $111.8 per barrel, futures for WTI oil for August on the New York Mercantile Exchange (NYMEX) by this time are about $108.6 per barrel. barrel.

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ANALYSTS AT BANK OF AMERICA DO NOT EXPECT FURTHER STRENGTHENING OF HRYVNIA

Analysts at Bank of America (BofA) Global Research do not expect further nominal strengthening of the hryvnia, according to a June 14 BofA study.
The bank said that it is still constructive in relation to the International Monetary Fund (IMF), but the bank does not expect further nominal strengthening of the hryvnia, especially given the seasonality of the exchange rate in the third quarter, BofA said.

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RAIFFEISEN ANALYSTS PREDICT NEW $6-8 BLN PROGRAM FROM IMF TO UKRAINE

Ukraine will be able to sign a new program with the International Monetary Fund (IMF) in the amount of $6-8 billion by the end of 2019 and make necessary payments on foreign debt in 2020 and 2021, Raiffeisen analysts predict. In the document, they noted a high probability of obtaining the majority by the pro-presidential party Servant of the People, which was leading in polls with an indicator of 41.5-52.30%, which will ensure the implementation of reforms promised by President of Ukraine Volodymyr Zelensky, due to which Ukraine will be able to receive IMF support.
According to the analysts, even if it fails to independently form the government, the Servant of the People party can form a coalition with Svyatoslav Vakarchuk’s Holos party, which is supported by 5-7% of the respondents.
“Given the commitment of President Zelensky to reforms, the new government will be able to sign a new three-year program with the fund in the amount of $6-8 billion by the end of 2019,” the report says.
Raiffeisen analysts point out that 40% of payments on Ukraine’s gross external debt are in 2020–2021 ($16.8 billion in 2020 and $18.5 billion in 2021), therefore the government needs a new cooperation program with the IMF as soon as possible. “Even given the full rollover of inter-company loans and the refinancing of 50% of corporate credits, Ukraine will have to pay $12.5 billion in 2020 and $15 billion in 2021,” the document says.

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