Russia braces for financial hit as Urals oil price plummets
The Russian Ministry of Economic Development has revised its forecast for the price of Urals oil in 2025 to approximately $56 per barrel. The independent, non-Kremlin service moscowtimes.ru reports that this is the largest drop since the early days of the pandemic in 2020.
The Russian authorities are preparing for several years of low oil prices. The Ministry of Economic Development recently updated its forecast for the years 2025-2028 and reduced the average price of Urals oil to $56 per barrel for this year. This new figure is the lowest since 2020, when the pandemic led to a decline in oil demand, resulting in an average price of roughly $41.70 per barrel.
Russia: oil price falls below crucial threshold
The new forecast is significantly lower than the one expected in the Russian budget (the estimated rate for a barrel of Urals oil was $69.70) and lower than the crucial price of $60, which forms the basis for financial planning. Revenue from oil exceeding this price goes to the Russian National Welfare Fund, while deficits caused by oil pricing dropping below $60 are offset by this fund.
Experts predict that each pound drop in the oil price costs the budget about 160 billion roubles (around £1,5 billion) annually. If the price falls to $55 per barrel, the revenue shortfall could reach approximately 0.9 trillion roubles, requiring compensatory measures.
Despite challenges facing the Russian economy, which is heavily reliant on oil and gas revenues, the ministry has maintained its economic growth forecast for 2025 at 2.5 per cent.
