(Bloomberg) -- Sliding oil prices are eroding the buffers that helped Russia withstand the emerging-market retreat.
Investors are pulling cash from the biggest exchange-traded fund tracking Russian assets at the fastest pace in almost a year. Redemptions from the VanEck Vectors Russia ETF, which invests in oil and gas companies including Gazprom (MCX:GAZP) PJSC, Rosneft PJSC and Lukoil PJSC, reached $88.9 million last week, the strongest since June 2017, according to data compiled by Bloomberg.
“There is a global outflow from emerging markets -- Russia isn’t an exception from the trend, but recently its market was supported by higher oil prices,” said Vadim Bit-Avragim, a money manager at Kapital Asset Management LLC in Moscow. “Now the factor of high crude price is diminishing.”
The withdrawals come as Russia and Saudi Arabia discuss restoring some of the output they halted as part of an accord with 22 other producers, from the Organization of Petroleum Exporting Countries and beyond. That took crude prices from as much as $80.49 a barrel last week, the highest since 2014, to $75.24 a barrel on Monday, the lowest since May 8, and erased some of the ruble’s gains.
The currency of the world’s biggest energy exporter has weakened 1.8 percent against the U.S. dollar since May 22, the second-worst performance globally.