.jpg?20250507')
Russia’s oil price in roubles has fallen to a two-year low below the 4,000 rouble per barrel mark and some 40 per cent lower than planned in the federal budget, data showed, piling pressure on the Kremlin, already saddled with a burgeoning budget deficit.
For Russia, the world’s second largest exporter, oil and gas have been both a strength and a weakness since the Soviets discovered one of the world’s largest hydrocarbon basins in Western Siberia in the decades after the Second World War.
A sustained fall in the oil price far below the level planned in its budget would hamper Russia’s ability to continue to fight in Ukraine, though tax rises or cuts to spending in the short term could help cushion the impact of lower oil prices.
Driven by expectations that production will exceed consumption, global oil prices have lost over 10pc in six straight sessions and dipped over 20pc since April when US President Donald Trump’s tariff shocks prompted increased bets on a slowdown in the global economy.
According to Reuters calculations, the average price of Russia’s mix of Urals and ESPO blends dipped on May 2 to $48.92 per barrel, or 3,987 roubles, which is more than 40pc below the 6,726 roubles the government had originally planned for this year.
That’s the lowest since May 2023, according to Reuters data. It is also still well below the recently downgraded government forecast of 5,281 roubles per barrel for the Russian oil blend, used for taxation.
The weakening of the oil price in roubles has also been driven in part by a strengthening of the Russian currency on the back of expectations of easing Western sanctions amid talks with the US to settle the war in Ukraine.
Oil prices have also dropped following the decision of the Organisation of the Petroleum Exporting Countries (Opec) and its allies led by Russia, a group known as Opec+, to speed up oil output hikes.
The fall in the prices of energy, which account for a third of Russia’s federal budget proceeds, prompted the government last week to hike the 2025 budget deficit estimate to 1.7pc of gross domestic product from 0.5pc for 2025.
The move came after it reduced the energy revenue forecast by 24pc due to expectations of a prolonged period of low oil prices.
&uuid=(email))