Oil has gone into the shadows: Brent is below $60, Urals - $50

The Russian economy has become dependent on oil prices again, but now not as a driver of growth, but as a risk factor. In the spring of 2025, the cost of a barrel of Brent dropped to its lowest levels since 2021, and Russian Urals oil was even trading around $50 per barrel on some days. This is below the cut-off price included in the budget. Analysts are talking about lost money, a potential threat to the Russian economy, and even the need for new tax solutions. Izvestia investigated what this means for the state, companies and citizens.

The cut-off price as a breaking point

Back in March, according to the Ministry of Economic Development, the average price of Russian Urals oil dropped to $58 per barrel — that is, it was below the cut-off price of $60. Urals is currently trading even lower.

—In early April and early May, Brent oil prices dropped to $60 per barrel, the lowest since 2021, and the Urals price was around $50 per barrel," Finam analyst Alexander Potavin cites the data.

According to the updated forecast of the Ministry of Economic Development, the average annual oil price in 2025 will be $56 per barrel, although $65 was expected in the budget. At the same time, the forecast for export volume was lowered from 234 to 230 million tons. All this means a decrease in oil and gas revenues by almost a quarter: from 10.9 to 8.3 trillion rubles, Alexander Potavin cites figures.

— As a result, the new budget deficit of the Russian Federation may amount to 3.792 trillion rubles, although 1.173 trillion rubles were initially expected. This increase was mainly due to a strong decrease in planned oil and gas revenues," he explains.

Every dollar of lower oil prices takes away about 150-200 billion rubles of revenue per year, depending on the ruble exchange rate, Marcel Salikhov, director of the Center for Economic Expertise at the National Research University Higher School of Economics, told Izvestia.

The negative scenario

The state will have to look for ways to cover the gaps. The main reserve, the National Welfare Fund, is declining, and its liquid part is small.

— The National Welfare Fund was created in order to accumulate funds in it in conditions of high oil prices. And at low levels, when federal budget replenishment is declining, it would serve as a source of financing for the emerging budget deficit. At the same time, the liquid part of the NWF is now small, and there are few other visible sources of financing the deficit, and the possibilities for budget maneuver are limited. All this determines the need for increased attention to the current situation," says Vladimir Klimanov, Director of the IPEI Regional Policy Center at the Presidential Academy.

The alternatives are also not encouraging: either devaluation, high-interest borrowing, or asset sales.

— You can cover the budget deficit through the devaluation of the ruble, or through large-scale borrowing of money on the domestic market, which puts an end to the future development of the country at very high rates, or through the sale of currency from the National Welfare Fund. The authorities will also have to pump money out of state corporations and state-owned banks as much as possible, resell nationalized businesses, raise taxes, privatize some state-owned companies and other sources of financing. At the same time, inflation in Russia is likely to remain quite high. Given that the National Welfare Fund is a serious resource for the infrastructural development of the Russian economy, the authorities will try to keep this "pot" as complete as possible, — says Alexander Potavin.

How will the citizens feel

Budget problems can lead to a decrease in the real incomes of the population, especially in budget-dependent regions and employees of state-supported industries.

— A reduction in basic oil and gas revenues due to a decrease in the cut-off price for oil in the basic rule will contribute to fiscal consolidation, that is, a reduction in budget expenditures in relative terms. This is not a very pleasant factor for a large part of our population, which is tied to receiving income from the budget," warns Potavin.

However, according to Klimanov, the current income structure avoids the most difficult scenario.:

— It is clear that the reduction in oil revenues will adversely affect the government's ability to maintain financing of its commitments. On the other hand, oil and gas revenues today account for only a quarter of federal budget revenues, while a few years ago their share was close to half. Therefore, the impact of the current decline should be significantly less painful than before.

An additional negative factor for global oil prices may be OPEC+'s decision to increase production, said Vasily Tanurkov, Senior Director of the ACRA Corporate Ratings group.

"At the same time, the rapid increase in production in conditions of a noticeably lower price level is regarded by the market as a signal of OPEC+'s readiness to maintain prices at a significantly lower level than previously expected," the analyst noted.

Adaptation is possible

However, not all experts see the situation in dark colors. Thus, in the industrial environment, the issue of adaptation and internal reorganization of the economy comes to the fore.

— The industry has been living under the conditions of sanctions pressure and volatility of export earnings for several years. Today, the most important thing is to prevent the rollback of digital and infrastructure initiatives that allow businesses to operate more efficiently even with limited resources. Enterprises have an incentive to invest in import substitution not out of patriotism, but because it is becoming a real basis for survival. We see that logistics chains have been rebuilt, and domestic demand for machine-building products is growing, especially from the agricultural sector and construction. This is a good start," says Olga Orlova, Head of the Industry department at the Institute of Oil and Gas Technologies.

From the point of view of technical analysis, the situation also does not look fatal, says Daniil Ivanin, chief analyst at VMT Consult.:

— If you look at the dynamics of Brent prices, it may well return to the range of $ 70-75 per barrel in the event of stabilization of the situation in the Middle East and moderate growth in demand in Asia. The oil market is traditionally cyclical, and the current decline fits into a medium-term correction model. Market concerns about a slowdown in the global economy have not yet been confirmed in the macro indicators of China and India. This can give a positive impetus to Russian oil," he says.

So far, in the baseline scenario, while maintaining the current political situation, Sovcombank analysts have included the following figures in their forecasts for the fourth quarter of 2025: 94 rubles per dollar, 106 for the euro and 12.7 for the yuan.

"We expect the ruble to dollar exchange rate to average 91 rubles per dollar this year," says Mikhail Vasiliev, chief analyst at Sovcombank.

Thus, despite the growing deficit and risks to the budget, some experts urge to look more broadly at the possibilities of an internal rethink of the economic model and the potential for price recovery if the external economic situation stabilizes.

Possible changes in taxes and budget

In 2025, there has already been an increase in taxes both in terms of income tax and personal income tax, Marcel Salikhov recalls. "So far, an additional tax increase for 2026 has not been publicly discussed," he says.

A possible second block of budget amendments is on the horizon, according to other experts interviewed by Izvestia.

"A second set of budget amendments is likely to be prepared in the fall, which currently does not correlate with rising costs due to falling oil prices," warns analyst Alexander Potavin.

If the risk scenario described by the Bank of Russia is implemented, the consequences may be more severe.

— In the current situation of the tariff war that has begun, it is impossible to exclude the development of the situation according to the "risky scenario" described by the Central Bank. In this case, increased sanctions pressure is expected for the Russian economy, limiting exports: the geopolitical background is deteriorating and the discount on Russian goods is expanding. Due to the global financial crisis and the strengthening of sanctions restrictions and falling oil prices, there is both a shift in the potential level of the Russian economy and a slowdown in its growth, the analyst believes.

At the same time, as we know, geopolitical tensions are gradually fading, says Olga Orlova.

— Against the background of a potential improvement in Russia's relations with the countries of the conditional West, we see great prospects not only for Russian companies, but also for the economy as a whole. This may affect the strengthening of the Russian national currency, as well as inflationary expectations. The risk scenario of the Central Bank is not a fact that is being implemented in practice. We need to look at political events," the analyst believes.