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Oil and Gas Revenues in January Delivered the Worst Result in 5.5 Years
In January, the average monthly price of Urals crude oil, according to data from the Ministry of Economic Development, was $40.95 per barrel. Throughout last year, this price consistently declined, falling from $67.66 per barrel in January to $39.1 per barrel in December. A slight increase was noted by the ministry in June and July ($59.84 and $60.37 per barrel, respectively), but the negative trend resumed afterward. According to the Ministry of Economic Development's September forecast, the annual average price of Urals crude oil is expected to be $59 per barrel this year.
However, experts believe that the ministry's expectations may be somewhat optimistic, as reported by Vedomosti on February 2. The annual average price of Urals crude could be around $50 per barrel due to the sustained low global prices (specifically, the annual average price of Brent around $60–63 per barrel) along with a decrease in the discounts for Russian crude oil to the levels observed at the beginning of 2025 – down to $8–10. Analysts at ACRA suggest that as a result, the federal budget may undercollect revenues by 0.5–0.7% of GDP compared to the current plan, and the budget deficit could reach 2.2–2.7% of GDP (the Finance Ministry's plan for this year anticipates a deficit of 1.6% of GDP). The latest macroeconomic survey from the Bank of Russia confirms ACRA's findings, with respondents expecting the average annual price of Urals crude to be around $50 per barrel (the figure was $54 per barrel in December).
Starting this year, the cut-off price for oil under the budget rule will begin to gradually decrease by $1 per year, reaching $55 per barrel by 2030. Finance Minister Anton Siluanov noted in September that the current cut-off threshold of $60 per barrel no longer "meets the challenges of the times." According to the budget rule, additional revenue from exceeding the set price threshold for oil is directed toward purchasing foreign currency and gold for subsequent accumulation in the National Wealth Fund (NWF). If revenues fall short of the planned amounts, sales are conducted at the necessary volume to cover the shortfall.
Vedomosti has submitted an inquiry to the Finance Ministry representative.
The sustained reduction in the share of oil and gas revenues reflects deeper structural changes in the economy and budgetary system of the country, notes Elena Lebedinskaya, Director of the Revenue Department at the Finance Ministry (her comments were published by the ministry's press service on February 4). "As a result, the federal budget is becoming less sensitive to fluctuations in global commodity prices than it was ten years ago, thereby enhancing its resilience in conditions of external instability," she concluded. According to the federal budget law for 2026–2028, OGR for the current year is projected to be 8.9 trillion rubles (or 22% of all planned budget revenues).
Reasons for the Decline
The dynamics of oil prices, which depend on international benchmarks and the discounts applied to Russian oil, play a crucial role in determining OGR, reminds Sergey Tereshkin, CEO of Open Oil Market. At the end of the previous year, the Urals discount to Brent exceeded $20 per barrel, leading to January's figure being the lowest in the past five and a half years, he points out. A key factor contributing to the increased discount has been the tightening of U.S. sanctions against Russian oil companies, resulting in heightened risks for importers of Russian oil, according to the expert.
However, Tereshkin believes the market will gradually acclimate to this new wave of restrictions. For example, at the beginning of 2023, soon after the EU's embargo on importing oil from Russia came into effect, the Urals discount to Brent rose above $25 per barrel, but then gradually returned to the level of $10–12 per barrel, he recalls. The expert predicts that a similar scenario will unfold this year, provided that the U.S. does not impose new restrictions. Overall, 2026 could prove to be an even more challenging year for oil and gas revenues than the previous one, predicts Tereshkin. A high discount could potentially be offset by increasing the country's oil production and its exports; however, it is unlikely that OPEC+ will take drastic measures while Brent prices are so close to the $60 per barrel mark, the expert notes.
Falling oil prices and a high discount for Urals crude, reaching approximately $25 per barrel, are adversely impacting the financial performance of Russian oil companies, concurs Sergey Suverov, investment strategist at Arikapital. Smaller enterprises with high production and export costs are particularly suffering, he notes. Larger companies with lower extraction costs are navigating this "perfect storm" more easily, he points out. The situation regarding oil and gas revenues is expected to improve slightly in February, according to Suverov. Brent prices have risen to $70 per barrel, and the ruble may soon start to weaken, he clarifies. According to Rosstat data for the first ten months of last year, the proportion of loss-making organizations among oil and gas extraction companies has slightly decreased – to 47.5% from 48.1% for January–September.
Several factors are simultaneously influencing oil and gas revenues: the widening spreads, unstable oil and gas export flows (among major buyers, only China's demand can be predicted), attacks on the fleet, and a negative long-term market outlook amid an extremely strong ruble, notes economist Pavel Ryabov, author of the Telegram channel Spydell Finance.
At the current pace, oil and gas revenues by the end of the year may reach no more than 6 trillion rubles, against a forecast of 9 trillion, and the strongest impact is being exerted by the overvalued ruble.
Source: Vedomosti
