The decline in oil prices, triggered by the trade policies of U.S. President Donald Trump, has begun to negatively impact the military budget of Russian dictator Putin. According to the Financial Times, this could lead to a significant reduction in the revenue of the Russian Federation’s budget, approximately 1 trillion rubles (2.5%) below the planned figures for this year, if crude oil prices remain at their current level.
This is reported by Finway
Forecasts suggest that such a situation could slow Russia’s Gross Domestic Product (GDP) growth by 0.5%. The lack of necessary financial resources will force the Kremlin to take measures such as increasing borrowing, cutting spending on social programs, or using reserves.
State of the Oil Market and Investment Situation in Russia
The average price of Russian Urals oil has fallen to approximately $50 per barrel, the lowest level in the past two years. It is worth noting that the planned price in Russia’s budget is set at $69.70 per barrel.
Furthermore, data from the Central Bank of Russia indicates that following the onset of the full-scale war, the volume of foreign direct investment in the real sector of the economy has dropped by 57%, to $216 billion. This is the lowest figure since 2009. In the first year of aggression, Russia lost $138 billion in foreign investments, in 2023 another $80 billion, and last year $63 billion. In total, this amounts to over 50% of Russia’s annual budget, which was 41 trillion rubles.