Russian private oil company Lukoil's logo is seen in St Petersburg. Photo: AFP

The Russian ruble fell sharply in overnight trading after the announcement of US economic sanctions and the threat of more. It has lost more than 2% of its value against the US dollar during the past two days.

Unlike Turkey, which has to borrow about 6.5% of GDP to finance its net imports of goods and services, Russia is a net exporter, with a current account surplus a bit over 2% of GDP. The country’s debt is low by international standards. Total credit to the nonfinancial sector stands at just 83% of GDP, compared to 250% for the United States and China.

Russia’s economy is overly dependent on hydrocarbons, to be sure, but it has a reliable buyer in China, which prefers overland sources of energy for national security reasons. Economic growth is a tepid 1.3%, and the country has a headwind from demographics in the long term, but it has no urgent financial or economic problems.

That makes Russian oil stocks look attractive in comparison to Western peers. Lukoil is now trading 7 times trailing earnings and 6 times free cash flow and pays a dividend of nearly 5%.

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