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On Saturday, May 3, several OPEC+ members announced a new massive increase in their oil production of 411,000 barrels per day in June, which follows a similar increase decided for the month of May. In response, the price of the barrel of Brent went below 60 dollars yesterday, Monday May 5 – its lowest level for more than 4 years.
A sustainable decrease in oil prices, accentuated by Trump customs duties and the prospects for a decrease in global growth, will have a direct impact on Russian state finances.
-- Wednesday, April 30, the Ministry of Finance revised considerably upwards its objective of budget deficit for 2025. Moscow now estimates that it will reach 1.7 % of GDP this year, three times more than the previous estimate (0.5 %).
- Earlier in April, the Ministry of the Economy was lowering the estimates of the price of the oural oil barrel at $ 56, compared to $ 69.7 in its previous macroeconomic prospects.
- Moscow now expects revenues from the sale of its hydrocarbons to fall 24 % this year compared to 2024.
The Russian government would have already started to study the way in which it will have to adjust its budget from 2026 by revising the threshold of the barrel price taken into account in the calculation of the so -called budgetary rule. According to this, the excessive income generated by a barrel price greater than 60 dollars are transferred to the National Wealth Fund (FNB), which can then be used to compensate for a lower barrel price. However, in a context of sustainable decrease in the price of oil, the Kremlin plans to lower this threshold to $ 50 .
If this situation is worrying for Moscow, the Russian state would not be the only one impacted by a low barrel price.
- Russian oil companies are able to continue to produce with a barrel price of less than 40 or even $ 30 (the average cost of production of Russia would rather be $ 15 per barrel), which is not the case with the American oil industry, whose production costs are much higher.
- According to the opponent and former Russian energy minister Vladimir Milov, Putin would be delighted with a barrel price of less than 50 dollars because this would lead to a “massive disappearance of American oil production”, which would be followed by a rise in prices .
- At the beginning of April, the president of the American oil company Latigo Petroleum declared that if the prices did not recover in the next two months, “devastating events” could occur in the Permian basin, where the most important oil field in the United States is located .
Washington is said to be studying the application of secondary sanctions against Moscow to force Putin to get to the negotiation table. Republican senator Lindsey Graham, close to the Trump administration, said last week that he had a vast bipartisan support to vote a law that would impose prices of 500 % on countries that buy hydrocarbons and uranium from Russia .
