(April 7): The Kremlin said it’s doing everything possible to minimise the impact of a global oil price rout on Russia’s economy as the nation’s key export grade plunges towards US$50 (RM221.72) a barrel for first time in 21 months.

“We are very closely monitoring the situation, which is currently characterised as extremely turbulent, tense and emotionally overloaded,” the Interfax cited Kremlin spokesman Dimitri Peskov as saying on Monday. Russian authorities are working to minimise “the consequences of this international economic storm for our economy”.

Crude prices are critical for Russia’s federal budget, which relied on oil and gas for almost 30% of its proceeeds in January-February, according to government data. As the nation’s spending in the first two months of the year accelerated due to the war in Ukraine, any decline in revenues could put pressure on the nation’s finances. 

The country’s Urals grade, by far the country’s top export stream, slumped to US$52.76 a barrel at the Baltic Sea port of Primorsk on Friday, data from Argus Media show. It was last below US$50 in June 2023.

Russia, which leads the Opec+ producer alliance alongside Saudi Arabia, is closely monitoring the oil price decline, which Peskov said was driven by “the US decision to introduce tariffs for most countries in the world”.  

Last month, Russia’s Finance Ministry said that expected the average oil price in 2025 to be closer to US$60 a barrel instead of the US$70 that the country had budgeted for the year, according to Prime newswire. In that scenario, it forecast the budget deficit would increase though by no more than 1% of gross domestic product.

Headline oil prices have collapsed in the wake of wide-ranging tariffs that the US announced last week on the nation’s trading partners, clouding the global demand outlook. On top of that, Opec+ group is pledging to boost output next month, while Saudi Arabia has lowered its oil prices. 

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