By the end of 2025 and the beginning of 2026, the Russian budget came under severe pressure due to falling oil prices. In January and February, Urals oil prices reached $41 and $45 per barrel, significantly lower than the $59 forecasted in the budget. This disastrous situation posed serious risks to the budget deficit growth in 2026.
Increase in Oil Prices with the Onset of Conflicts
However, with the start of the Middle Eastern conflicts, Urals oil prices increased to $77 in March and $95 in April. This sudden price rise led to an increase in oil and gas revenues in the budget by nearly 240 billion rubles in April compared to March. Nevertheless, the Russian Ministry of Finance does not have overly optimistic expectations regarding future volatility and believes that oil and gas revenues have decreased compared to last year.
Possible Scenarios for Middle Eastern Conflicts
Four scenarios are envisioned for the end of the conflicts in the Middle East:
- Scenario One: A quick peace agreement and the reopening of the Strait of Hormuz, which may lead to a reduction in oil prices to $80 to $90.
- Scenario Two: Prolonged negotiations that keep Brent oil prices in the range of $95 to $115, benefiting Russia's economic interests.
- Scenario Three: Escalation of military tensions and an increase in oil prices above $110 to $120.
- Scenario Four: A prolonged conflict that could lead to a global economic recession and a sharp decline in prices.
Igor Yushkov, an expert at the National Energy Security Fund, believes that the best option for Russia is to maintain current prices between $100 and $110, where demand in the markets for Russian oil will not decline.
The situation in the gas market is also improving relatively due to a lack of stockpiling. Yushkov explains that gas producers have been forced to cut production due to attacks on infrastructure, which could lead to shortages and price increases in this sector.
Ultimately, even in the best scenario, securing the budget will not be easy. According to calculations, in the first four months of the year, oil and gas revenues were about 2.3 trillion rubles, necessitating a significant increase in revenues in the remaining months.
