MOSCOW: The price of Russian Urals flagship oil blend, denominated in roubles, fell in early May 14% below the breakeven level assumed for this year’s federal budget, Reuters calculations showed, exacerbating already huge shortfall in the state coffers.
The trend is continuing from the start of the year: in January - March, the Urals rouble price was 25% below the target. It almost reached the target level in April, when it averaged 4,770 roubles per barrel.
Russia’s federal budget recorded a 3.4 trillion rouble ($44 billion) deficit in the first four months of the year, as Moscow continued to spend heavily and energy revenue fell sharply.
Oil prices rise as tight supplies compete with economic concerns
According to Reuters calculations, average price of Urals was 4,107 roubles per barrel in the first ten days of May, while the budget assumes the breakeven price of 4,788 roubles per barrel, or $70.1 per barrel under the rouble rate of 68.3 per $1.
In May, the price fell thanks to a stronger rouble and a weaker global oil prices in dollars. The rouble price defines state budget revenues from oil and gas sales, especially from the mineral extraction tax.
Just four months into the year, the spending gap in April took Russia’s deficit 17% above the government’s plans for a 2.9 trillion-rouble deficit in 2023 as a whole.
Spending was 26.3% higher in the first four months of the year compared with 2022, the preliminary data showed, while income was down 22.4%.
Amid falling revenues, Moscow has been forced to start selling international reserves to help cover the deficit.
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