The Russian government plans to gradually reduce the oil price threshold used for calculating revenue under its “budget rule,” as announced by Finance Minister Anton Siluanov on Thursday. This decision aims to make the nation’s finances less susceptible to fluctuations in the energy market and to the impact of Western sanctions.
Currently, any oil and gas revenue exceeding $60 per barrel of Urals crude is allocated to Russia’s National Wealth Fund (NWF), while deficits are supplemented from savings within the fund.
To address this year’s significant budget deficit, driven by increased defense expenditures, the government intends to withdraw approximately 447 billion rubles ($5.39 billion) from the NWF, which has an estimated total of around 4 trillion rubles ($48.25 billion).
In his Thursday remarks at the Moscow Financial Forum, Siluanov indicated that the cut-off price for oil would be reduced by $1 each year starting in 2026, eventually reaching $55 per barrel by 2030.
“We need to strengthen the budget to make it more resilient to any restrictions we encounter,” Siluanov emphasized. He did not clarify whether this adjustment would persist regardless of future oil price changes.
In August 2023, Russia effectively abandoned its budget rule more than a year after its large-scale military invasion of Ukraine. Bloomberg reported in May that the authorities were contemplating lowering the price threshold for oil.
Siluanov has been advocating for adjustments to the budget rule since the spring, when prices of Urals crude fell below $60 per barrel. Currently, the proposed draft budget for 2025 anticipates an average Urals price of $69.70 per barrel.
The government is also preparing to revise the federal budget later in September to align it more closely with its socio-economic policy goals.
According to Reuters, Russia’s oil and gas revenues for the period from January to September are expected to decline by 20.5%, amounting to around 6.62 trillion rubles ($79.58 billion), due to lower global prices and the strengthening of the ruble. For September alone, revenues are projected to decrease by 23% to 592 billion rubles ($7.1 billion).
Siluanov noted that with the new threshold, energy revenues are expected to constitute 22% of the 2026 budget, a drop from 25% in the first eight months of this year.
