1 July 2026
The surge in oil revenues experienced by the Russian economy after the outbreak of the war in Iran has finally faded.
The price of Urals crude, the main export grade of Russian oil producers, fell to $44.96 per barrel as of June 26, Bloomberg reports, citing Argus data. Since the beginning of June, Urals has fallen by 40%, and by 2.5 times compared to the peak of the Strait of Hormuz crisis: in April, Russian oil was selling for $115 per barrel, without any discount to Brent.
ESPO, a Far Eastern grade, is slightly more expensive at $61.27 per barrel. However, its price has also fallen by 20% since the beginning of June and 36% since the beginning of May, and, like Urals, has retreated to the levels of early March.
Oil companies’ revenues are also declining. Although refinery downtime has resulted in them exporting a record 4.13 million barrels per day, export revenue has fallen by a third compared to May, to $1.9 billion per week, according to Bloomberg estimates.
Falling oil prices promise Russia increased budget problems, which will become apparent in August and September, warns Andrey Zatsepin, an analyst at Alor Broker. According to Bloomberg estimates, the average Urals price in June fell to $62 per barrel, and current prices are already a quarter lower than the budgeted price of $59 per barrel.
According to the Ministry of Finance, oil and gas revenues fell by 30% from January to May, and the deficit reached 6 trillion rubles. By the end of June, the budget gap had grown to 6.4 trillion, according to Gazprombank analysts: this is double the full-year plan of 3.8 trillion rubles.
“The budget is bursting,” a current Russian official told The Washington Post. “The deficit is huge, and the National Welfare Fund is nearly depleted.” As of June 1, the NWF held 3.4 trillion rubles in liquid assets—that is, unspent money. Since the beginning of the year, these government reserves have shrunk by 600 billion rubles, and almost threefold compared to pre-war levels (8.8 trillion rubles as of February 1, 2022).
To cover the deficit, the authorities will have to increase the money supply, and after the Duma elections in September, unpopular decisions like a tax on “excess profits” cannot be ruled out, according to Zatsepin. According to Bloomberg, the Finance Ministry needs an additional 4-5 trillion rubles—this is how much this year’s military spending will exceed initial plans. According to the agency’s sources, the government plans to sequester civilian budget items and borrow 2-3 trillion rubles more.
Oil at $45 a barrel and gas at 1000 rubles per litre, what can go wrong?
And more destruction is on the way.