Russia may suffer from oil price hike
Uncertainty over Iran's oil exports is making the markets volatile – and that is making traders find new ways to limit their risks. For instance, Russia's leading stock market RTS currently trades oil futures, with pricing based on data from Platts, a leading provider of energy information.
Jorge Montepeque, Global Director of Market Assessment at Platts points out that: “Russia is now learning how to trade oil and oil futures. I think many Russians are already trading futures but primarily in foreign exchanges. So, it is not yet a process that is happening everyday and inside of Russia, but companies at RTS are trying to start the educational process and make people acquainted with the markets, but there is still a lot of education to go through”.
He does not think such exchanges should be established by the state.
“Creating an exchange has a feeling that is mandated by the state. Markets and state typically do not mix. An exchange is actually a result of a market need, not of a state need. And if the market is not ready, then the market is not ready. The state cannot make it ready,” Jorge Montepeque says.
“Markets require non-intervention, they require pure free market forces to generate them. So, while there may be a desire internally in Russia to have them, that is something that the market will say whether it wants to have them or not. It cannot be decided from the outside, it used to be the creation of the market,” he adds.
Mr Montepeque underscores the existing fears on the oil futures trading in Russia.
“Right now there is still a sense that the rules of the game could be changed by state activity or state intervention. I think the market is to have greater confidence that the rules will not be changed, that the markets will be free. If those conditions are met, then the possibility of having a successful, volumetrically largely trading contract, would be greater,” the expert concluded.