Russian Oil Price Collapses Below $35 Per Barrel

The Russian budget is losing billions.

Russian oil prices continue to fall rapidly under the pressure of U.S. sanctions that have caused a rift in the well-established flow of commodity exports to India and China, The Moscow Times writes.

The price of Urals with shipment from the port of Novorossiysk fell to $34.52 per barrel, half the level of the beginning of the year.

In the port of Primorsk on the Baltic Sea, the main export mark of Russian oil producers was sold at $36.07 per barrel. Discounts on Urals reached $23-25 a barrel in Novorossiysk and $24 in Baltic ports, according to Argus data.

Separate shipments of Urals that Russia is trying to sell to China are leaving at a discount of up to $35 a barrel, sources told Reuters. That would mean a price below $30, a record low since the pandemic. Russian oil companies are forced to cut prices to sell batches that Indian refineries have begun to refuse, the agency's interlocutors explained.

Russian oil is selling for 30% and in some cases 50% cheaper than the Brent grade, notes Janis Kluge, a researcher at the German Institute for International Security Problems. As a result: the Russian budget "loses billions of dollars every month because of sanctions," he states. In November, according to the Ministry of Finance, oil and gas revenues to the treasury collapsed by 34% year-on-year, the cumulative total for 11 months - by 21%. In December, according to Reuters calculations, tax collections from oil and gas may become the lowest since August 2020 - 410 billion rubles, which is 49% less than in December-2024.

The Ministry of Finance initially prepared the 2025 budget based on the assumption that oil would cost $69, planning to collect 10.94 trillion rubles in taxes from oil and gas companies.

In the middle of the year, the plan was lowered by almost a quarter, to 8.65 trillion rubles, and the forecast oil price - to $58. In fact, the budget may fall short by about 300 billion rubles even compared to the already worsened plan, analysts at Gazprombank estimate.

The total deficit of the Russian budget system, including the federal budget, regional budgets, the Social Fund and the Compulsory Medical Insurance Fund, may reach 8 trillion rubles or 4% of GDP this year, and this will be the maximum since 2020, economist Viktor Tunev predicts.

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