On April 7, the Kremlin announced it is “closely monitoring” the situation in the oil markets as the price of Urals crude, Russia’s main oil export, dropped toward the crucial $50 per barrel mark.
Kremlin spokesperson Dmitry Peskov told Interfax, “We are carefully watching the situation, which is currently very turbulent, tense, and emotionally charged.”
Peskov blamed the price drop on the “U.S. decision to impose tariffs on most countries globally.”
Urals crude fell to $52.76 per barrel at the Baltic port of Primorsk on Friday, according to data from Argus Media, reported by Bloomberg. This is significantly lower than the $70 per barrel target set in Russia’s 2025 budget plans.
Oil and gas revenues make up nearly 30% of Russia’s budget, based on data from January and February. The price decline poses serious financial risks for the country. A sharp drop could destabilize Russia’s federal budget, especially as military spending for the Ukraine conflict has already pushed government expenses higher in early 2025.
If prices fall below the $50 mark, Russia’s key oil export could reach its lowest level in almost two years.
Just last month, global oil prices were rising, partly due to U.S. sanctions on Iran and talks of a ceasefire in Ukraine. Brent crude reached $72.52 per barrel, while U.S. West Texas Intermediate rose to $68.68.
However, Russian oil and gas revenues fell by 17% in March compared to the previous year, totaling 1.08 trillion rubles ($12.8 billion). This decline was partly due to discounted oil prices and a stronger ruble, which reduced the government’s budget inflows, according to data from Russia’s Finance Ministry.
The ministry reported a loss of roughly 230 billion rubles ($2.7 billion) in tax income compared to March 2024, with oil and gas revenues making up one-third of total state income.
Despite Western sanctions and a price cap meant to limit Russia’s oil earnings, energy revenues remain a vital source of funding for the Kremlin’s ongoing war in Ukraine.
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