Trump's tariffs, OPEC+ collapse, Iranian factor: risks for Russian oil named

Russian oil continues to steadily fall in price, following global quotes. In June, the average price of Urals, used to calculate raw material taxes, fell by almost 14% year-on-year to $59.8 per barrel, according to data from the Ministry of Economic Development. The outlook for the Russian budget looks quite alarming, given the role of oil and gas revenues in its formation, as well as in financing the deficit, which reached 2.59 trillion rubles in the first half of the year.

In June 2024, the average price of Urals was $69.58 per barrel. Thus, over the past year, it has decreased by a total of $9.74. And during April-May, according to the Ministry of Economic Development, quotes were consistently below $55. In May, for example, $52.08. Of course, Russian oil demonstrated such price dynamics in the second place: the weather on the world market is made by the benchmark North Sea Brent grade.

Despite a short-term surge due to the escalation of the Iran-Israel conflict (when prices momentarily rose to almost $80 per barrel), overall Brent remained true to the long-term trend of falling prices. Which, among other things, was reinforced by the growing concerns of market participants about the slowdown of the global economy due to the trade wars initiated by Trump. Against this background, tax revenues of the Russian budget from the sale of oil and gas in the last month of spring collapsed by 35% year-on-year, amounting to 513 billion rubles.

- The situation with Urals prices is determined by the global market situation, - Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, said in an interview with MK. - Russian oil is still trading at a discount of $10-13 to Brent, which has fallen significantly in price over the year: in 2024, it was consistently above $70 per barrel, and today it fluctuates around $64. As for the consequences for the Russian budget, the picture is twofold. In the original version of the budget parameters, effective since January 1, the average annual price of Urals was set at $69.7 per barrel, and from this point of view, we are losing revenue. But the new version, approved at the end of April, already includes the figure of $55, which allows us to meet the budget.

In addition, since the beginning of 2025, the calculation of the mineral extraction tax (MET) includes the price of not only Urals, but also ESPO - a low-sulfur Siberian grade, which makes Russian oil more expensive overall. Accordingly, nothing terrible is happening. However, in the new version of the federal budget, the deficit is higher - 1.7% of GDP, instead of 0.5% according to the initial calculations. Therefore, of course, the more expensive oil is (within reason, up to $100 per barrel), the more the state earns.

- How might the price dynamics for Urals develop in the future?

- It is impossible to predict the development of events for the year ahead and beyond. A lot depends on Trump's story with tariffs, primarily in the context of US-Chinese trade relations. Whether the parties will be able to agree, and on what specifically - this will determine the state of the world economy as a whole, and therefore the demand for oil and oil products. Another factor, and one that has recently emerged, is Iranian. If the United States agrees with Tehran on its nuclear program and softens sanctions against its oil industry, then Iran will be able to increase production and exports. Accordingly, prices will go up.

For Russia, this is a clearly negative scenario. There is also a very real risk of the OPEC+ deal collapsing. Its participants even had to increase production volumes to let off steam and appease those who are unhappy with the restrictions. There are also malicious violators like Kazakhstan, which ignore the agreements reached within the OPEC+ framework, producing more and more oil. If the deal ceases to exist and everyone starts producing to the maximum, then shock cannot be avoided, and prices may immediately collapse to $20 per barrel. The process of stabilization and balancing of the world market will take time, and the Russian budget will face a serious problem.

- Should the government change the oil cutoff price within the budget rule? As Anton Siluanov stated, this issue will be considered when preparing the budget for 2026. According to the head of the Ministry of Finance, the current level of $60 per barrel no longer meets the challenges of the time, given the volatility in the Russian and global energy markets.

- It would be absolutely logical to change the cutoff price, since there is a stable trend towards a decrease in the cost of Russian oil. If earlier, for many years, it was guaranteed to be above $60 per barrel, today it has become commonplace to go to the $50 and below area. And considering that the Finance Ministry's responsibilities include the task of strengthening the ruble (although this does not increase budget revenues) by selling currency under the budget rule, the measure would give the financial department more room to maneuver. From the point of view of replenishing the federal treasury, it clearly suggests itself. I think the probability that the budget rule will ultimately be adjusted is quite high.