Russia has slashed its 2025 oil price forecast by nearly 17%, acknowledging weaker global demand and prolonged trade headwinds that threaten to exacerbate its budget deficit. In a stark revision, the economy ministry now expects:
- **Brent crude at 68/barrel∗∗(downfrom68/barrel∗∗(downfrom81.70 in September 2024 forecasts).
- Urals blend at 56/barrel∗∗—∗∗56/barrel∗∗—∗∗13.70 below the $69.70 price assumed in Russia’s 2025 budget.
Budget Crisis Looms
- Oil & gas revenues (33% of Russia’s budget) face a 21.5% drop in rouble terms due to weaker prices and a stronger exchange rate (forecast: 94.3 RUB/USD vs. 96.5).
- National Wealth Fund (NWF) drain: Liquid assets have plunged 65% since 2022 (39Bvs.39Bvs.112.7B pre-war), now covering persistent deficits.
- Urals price crisis: At 53–53–56/barrel (April 2025), prices are below the $60 “cut-off” needed to fund the NWF reserve.
Why the Downgrade?
- Global demand slump: Central Bank warnings of “lower-for-longer” prices.
- Sanctions overhang: G7 price caps and shadow fleet inefficiencies squeeze margins.
- Trade wars: Trump’s tariffs could redirect—but not collapse—Russian oil flows.
Russia’s Contingency Plans
- Currency sales: The government began offloading forex in April as revenues missed targets by 31%.
- Deficit spending: NWF remains the primary deficit tool, despite depletion risks.
- Economic optimism: GDP growth held at 2.5%, though inflation spiked to 7.6% (from 4.5%).
Global Context
- OPEC+ discipline: Russia’s pledged cuts (471K bpd through June 2025) may deepen if prices slide further.
- China’s pivot: Rising discounted crude imports cushion but don’t offset budget gaps.
What’s Next?
- NWF thresholds: If Urals averages below $60, Russia may tap sovereign reserves or hike taxes.
- Rouble resilience: Stronger currency (94.3 RUB/USD) helps importers but hurts exporters.
- Election wildcard: U.S. policy shifts under Trump could reroute—not reduce—Russian oil trade.
Russia Slashes 2025 Oil Price Forecast by 17%, Squeezing Budget Amid Prolonged Deficit