Russia could consider adjusting the oil price level in its so-called budget rule amid falling oil prices, Finance Minister Anton Siluanov said on Wednesday.
Under the budget rule, Russia has a baseline price of $60 per barrel of oil, above which it funnels excess revenue to its National Wealth Fund, a rainy-day reserves fund. However, when the price is below $60 per barrel – as Russia’s crude grades have been for two months now – Russia taps into the fund to offset shortfalls in revenue from oil and gas exports.
Changing the so-called cut-off price for the budget rule would signal a U-turn in Russia’s fiscal policy amid significantly lower oil prices compared to the first quarter of 2025.
“We need to think about whether, when preparing the new budget for the medium term, we should review the cut-off price level, the baseline price of $60 per barrel, to what extent it currently corresponds to the levels that allow us to ensure not only the preservation but also the replenishment of the National Wealth Fund,” Russian news agency Interfax quoted Siluanov as telling lawmakers today.
“We will discuss both the baseline price and the replenishment of the National Wealth Fund, as all of this is linked to the overall budget balance,” the minister added.
Last month, Russia said it expects 24% lower revenues from oil and gas this year compared to earlier estimates, following the oil price crash that began in early April and sank the price of its flagship Urals crude close to the $50 per barrel mark.
Oil and gas income – a key pillar of Russia’s budget revenues – is now expected to account for 3.7% of gross domestic product (GDP), down from 5.1% of GDP expected until the most recent oil price slide.
As a result of lower oil prices, Russia’s finance ministry has also tripled the estimate of its budget deficit to 1.7% of GDP for 2025, up from a deficit of just 0.5% of GDP previously expected.
By Charles Kennedy for Oilprice.com
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