The Kremlin announced on April 7 that it is closely monitoring the sharp decline in the price of Urals crude, its key export grade, which has fallen toward $50 per barrel.
“We are carefully watching the situation, which is highly volatile and tense,” said Kremlin spokesperson Dmitry Peskov in a statement to Interfax. Peskov attributed the price drop to “the U.S. decision to impose tariffs on most countries worldwide.”
On Friday, Urals crude dropped to $52.76 per barrel at the Baltic port of Primorsk, according to data from Argus Media, as reported by Bloomberg. This price is significantly lower than the $70 per barrel target used in Russia’s budget planning for 2025.
Oil and gas revenue make up nearly 30% of Russia’s budget, based on government figures from January to February, which further underscores the serious fiscal challenges posed by this price slump.
If prices continue to fall and drop below the $50 mark, it could lead to a significant destabilization of Russia’s federal budget. This comes at a time when military spending, particularly for the ongoing Ukraine conflict, has sharply increased government expenditures in early 2025.
In late March, global oil prices were on the rise, driven by U.S. sanctions on Iran and discussions about a potential ceasefire in the Russia-Ukraine war. At that time, Brent crude reached $72.52 per barrel, and U.S. West Texas Intermediate crude rose to $68.68.
However, despite these global price hikes, Russia’s oil and gas revenue dropped by 17% in March compared to the previous year, totaling 1.08 trillion rubles ($12.8 billion), according to the Moscow Times, citing data from Russia’s Finance Ministry.
The ministry noted that the government had lost around 230 billion rubles ($2.7 billion) in tax revenue from oil and gas, which now constitutes about a third of the country’s total income.
Energy revenues continue to be a vital source of funding for Russia’s war in Ukraine, despite Western sanctions and a price cap aimed at limiting Moscow’s earnings from oil exports.
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