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January Oil and Gas Budget Revenue Shows Worst Result in 5.5 Years
In January, the average monthly price of Urals crude oil was $40.95 per barrel, according to data from the Ministry of Economic Development. Throughout last year, the price consistently fell, dropping from $67.66 per barrel in January to $39.1 per barrel in December. A slight increase was recorded in June-July ($59.84 per barrel and $60.37 per barrel, respectively), but the negative trend continued afterward. According to the September forecast by the Ministry of Economic Development, the average annual price of Urals crude oil for the current year will be $59 per barrel.
However, experts believe that the ministry's expectations are somewhat inflated, as reported by Vedomosti on February 2. The average annual price for Urals crude oil could settle around $50 per barrel due to persistently low global prices (notably, the average annual price for Brent around $60–63 per barrel) while the discounts on Russian export oil prices decrease to levels seen in early 2025—a range of $8–10, analysts at ACRA reported in their macroeconomic forecast. Ultimately, the federal budget could potentially miss out on 0.5–0.7% of GDP in revenues compared to the current plan, with the deficit potentially reaching 2.2–2.7% of GDP (the finance ministry's plan for this year forecasts a deficit of 1.6% of GDP), they noted. The latest macroeconomic survey by the Bank of Russia confirms the conclusions of ACRA analysts—respondents expect the average annual price for Urals crude oil to be around $50 per barrel (the figure was $54 per barrel in December).
This year, the budget rule's cutoff price for oil will gradually decrease by $1 per year, reaching $55 per barrel by 2030. Finance Minister Anton Siluanov noted in September that the previous cutoff threshold of $60 per barrel no longer "responds to the challenges of the times." According to the budget rule, excess revenues from prices exceeding the established oil price level are allocated for purchasing foreign currency and gold for subsequent accumulation in the National Wealth Fund. However, if revenues fall short of planned amounts, sales will take place to cover the missing sum.
Vedomosti sent a request to a representative of the Ministry of Finance.
The consistent decrease in the share of oil and gas revenues reflects deeper structural changes in the country’s economy and budgetary system, noted Elena Lebedinskaya, Director of the Revenue Department at the Ministry of Finance (her comments were published by the ministry's press service on February 4). "As a result, the federal budget has become less sensitive to fluctuations in global commodity prices than it was 10 years ago, enhancing its resilience in the face of external instability," she concluded. According to the federal budget law for 2026-2028, OGR for the current year will amount to 8.9 trillion rubles (or 22% of all planned budget revenues).
Reasons for the Decline
The dynamics of oil prices, which determine OGR, are influenced by international benchmarks and discounts on Russian oil prices, reminds Sergey Tereshkin, CEO of Open Oil Market. At the end of last year, the discount for Urals against Brent exceeded $20 per barrel, leading to January's figure being the lowest in the past five and a half years, he noted. A key factor for the rising discount is the tightening of U.S. sanctions against Russian oil companies, which has increased risks for importers of Russian oil, the expert explained.
However, the market gradually acclimatizes to new rounds of restrictions, Tereshkin is confident. For instance, in early 2023, shortly after the EU embargo on Russian oil imports took effect, the discount in the price of Urals against Brent exceeded $25 per barrel but subsequently returned to $10–12 per barrel. In Tereshkin's view, a similar scenario is likely to unfold this year—provided that the U.S. does not impose new restrictions. Overall, 2026 may prove to be even more challenging for oil and gas revenues than last year, Tereshkin believes. The high discount could be offset by an increase in domestic oil production and exports; however, OPEC+ is unlikely to take drastic measures given that Brent prices are already close to $60 per barrel, the expert points out.
The drop in oil prices and the high discount on Urals oil, reaching around $25 per barrel, negatively impact the financial performance of Russian oil companies, agrees investment strategist Sergey Suverov from Arikapital Asset Management. Small enterprises with high extraction and export costs face particularly challenging conditions, he notes. Larger companies with lower production costs navigate the "perfect storm" with greater ease, he points out. Suverov believes the situation regarding oil and gas revenues should improve slightly in February. Brent prices have risen to $70 per barrel, and the ruble exchange rate may soon shift to a downward trend, he emphasizes. According to Rosstat data for the first ten months of last year, the share of loss-making organizations among oil and gas companies has slightly decreased—to 47.5% from 48.1% from January to September.
Various factors simultaneously impact oil and gas revenues: widening spreads, unstable oil and gas export flows (forecastable demand exists mainly in China), attacks on the fleet, and negative long-term sentiment in the commodity market amid an exceptionally strong ruble, says economist Pavel Ryabov, author of the Telegram channel Spydell Finance.
Under the current circumstances, oil and gas revenues by the end of the year are projected to be no higher than 6 trillion rubles, against a forecast of 9 trillion rubles, with the strongest blow coming from the overvalued ruble.
Source: Vedomosti
