Reuters: Even After Oil Prices Jump, Russia's Budget Is Cracking
- 4.03.2026, 15:37
The deficit could triple.
World oil prices jumped after US and Israeli strikes on Iran and reached the highest level since July 2024. However, the rise is still not enough to balance Russia's budget, according to calculations by Reuters.
It is noted that Russia has a federal budget deficit that is widening due to shortfalls in oil and gas revenues, which form almost a quarter of budget revenues. Although global oil prices topped $83 a barrel on Tuesday, Russian crude is sold at a discount to the international benchmark Brent crude, exacerbating budget problems.
Reuters calculates that the average discount was $26.50 a barrel in February. Russian crude is sold at a discount mainly because of Western sanctions for the war against Ukraine, particularly through the price cap mechanism. The European Union lowered the price "ceiling" to $44.10 a barrel on February 1 to limit Moscow's oil revenues.
Government finances are also under pressure due to significant defense and security spending once full-scale war begins in February 2022.
The agency calculates that the price of Russian Urals crude oil must rise by more than 50 percent from the level of 3,582 rubles (about $46.13) per barrel recorded on March 2 to reach the budgeted figures.
The Russian budget for 2026 envisages an average oil price of 5,440 rubles per barrel (about $59) and an exchange rate of 92.2 rubles per dollar. At the same time, assuming stable oil prices, the ruble should weaken to about 117.5 per dollar from the current level of about 77.65 rubles/dollar in order for the budget to be balanced.
An adviser to Russian Central Bank Chairman Kirill Tremasov said the regulator does not expect a sharp collapse of the ruble, and the current rise in oil prices may be short-lived. He said the government is focused on a long-term forecast, rather than fluctuations in the coming weeks or months.
Reuters estimates that Russia's budget deficit could nearly triple by the end of the year compared to the official plan due to lower oil sales and deepening price discounts, while spending could exceed targets.
This year's budget envisages revenues of 8.92 trillion rubles from oil and gas sales, but the current pace of revenues is lagging behind targets.