MOSCOW, March 3 (Reuters) – Global oil prices have rallied in the wake of U.S. and Israeli strikes against Iran to their highest since July 2024, but the rise still falls short of what is needed to balance the Russian budget, according to Reuters calculations.
Russia is running a federal budget deficit, which has been rising because of shortfalls in oil and gas revenue that make up nearly a quarter of budget proceeds.
While global crude prices vaulted above $83 per barrel on Tuesday, Russian oil is traded at a discount to the international Brent benchmark, contributing to the budget’s woes. According to Reuters calculations, the discounts averaged $26.50 per barrel in February.
The Russian oil price is sold at a discount mainly due to the Western sanctions over the war in Ukraine, including the price cap, which the European Union lowered to $44.10 per barrel from February 1 to constrain Russia’s oil revenue.
State coffers have been drained by heavy defence and security spending since Russia began its military campaign in Ukraine in February 2022.
According to Reuters calculations, the price of Russia’s Urals oil basket would need to climb by more than 50% from 3,582 roubles ($46.13) per barrel , which was reached on March 2 in order to meet the budgeted levels.
Russia’s budget for 2026 assumes an oil price of 5,440 roubles per barrel, or $59, and a rouble rate of 92.2 per U.S. dollar.
Conversely, assuming stable oil prices, the rouble should weaken to 117.5 per $1 for the budget to be balanced from around 77.65 currently.
Kirill Tremasov, adviser to the central bank governor, said on Saturday that the central bank did not expect the rouble to crumble, while the oil rally could be short-lived.
“Therefore, the government is focusing on a long-term forecast, not on what will happen in the next week or month,” he told reporters.
Russia’s public deficit could balloon to almost triple the official target by the end of this year as declining oil sales and deepening price discounts reduce revenues, while spending may exceed forecasts.
The budget forecasts income of 8.92 trillion roubles from oil and gas sales this year, while the pace of proceeds is now behind this goal.
($1 = 77.6500 roubles)
(Reporting by ReutersEditing by Tomasz Janowski)
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