UPDATE 1-Russian rouble, stocks tumble as oil slides on OPEC+ output boost

(Updates prices, adds analyst comment)

MOSCOW, July 19 (Reuters) – The rouble weakened to a one-week low against the dollar on Monday, at one stage losing almost 1%, hit by retreating oil prices after OPEC+ overcame internal divisions and agreed to boost output, a move that also sent Russian stocks tumbling.

By 1529 GMT, the rouble was 0.8% weaker against the dollar at 74.63, a one-week low, and had lost 0.8% to trade at 88.16 versus the euro.

Brent crude oil, a global benchmark for Russia’s main export, was down 5.4% at $69.60 a barrel.

Oil prices were lower after OPEC+ ministers agreed on Sunday to increase oil supply from August to cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.

“Despite the local drawdown, we view the increase in Russia’s oil production quota as positive for the rouble in the medium term,” said Promsvyazbank analysts in a note.

The fall in oil prices was adding to Russian headwinds on Monday, said Alfa Bank in a note, with risk-off sentiment over the spread of the Delta variant of the coronavirus offsetting strong earnings and resurgent consumer demand.

“We expect Russia investors to seek out defensive assets today.”

The rouble does have the support of a month-end tax period which usually prompts export-focused companies to convert revenues in foreign currencies into roubles and expectations of a rate hike by the central bank later this week.

Governor Elvira Nabiullina said last month the board may consider raising rates from 5.5% by 25-100 basis points at its July 23 meeting to rein in inflation.

A Reuters poll on Monday showed market expectations leaning towards a 100 basis-point interest rate hike on Friday.

Russian stock indexes were at their weakest since late May.

The dollar-denominated RTS index was down 3% to 1,555.5 points, its lowest since May 21. The rouble-based MOEX Russian index was 2.3% lower at 3,682.8 points, its weakest since May 25.

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