World oil prices have fallen to a level that could lead the Russian budget to a deficit at the end of the year. The average cost of a barrel of Russian Urals oil in early August fell below 4,000 rubles. Attention to the negative trend drew the publication "Kommersant".

Since the beginning of August, oil prices in rubles have fallen by 17%, the main driver is the fall in world oil prices, against this background, a barrel of Russian Urals last week fell to an annual minimum and amounted to 3.65 thousand rubles per barrel. At the same time, even after the rebound of oil on world markets, the cost of a Russian barrel was still at the level of 3.9 thousand rubles.

The pressure on the Russian budget is determined by the size of the discount for Russian oil. If the North European benchmark Brent was trading at $97-100 per barrel in August, then the Russian Urals was around $65.3. The point of a deficit-free budget for Russia is at the level of 3.2 thousand rubles, and the average price of oil in 2022 is still at the level of 6.1 thousand rubles, however, the publication notes that if the trend continues, there is reason to fear that the average price will drop to a critical value .

This version is also supported by the dynamics of budget oil and gas revenues. The Ministry of Finance reported earlier that oil and gas revenues for the seven months of 2022 amounted to 7.1 trillion rubles, but the dynamics of revenues fell sharply from 1.8 trillion in April to 886 billion in May, and in June and July even lower - to 718 and 771 billion rubles, respectively. The world oil market is currently reviewing price dynamics due to global factors. If before the summer the main reason for the rise in energy prices was the lack of supply, now the market is trying to assess the risks of a reduction in demand against the backdrop of high inflation and the risks of a recession in the global economy, and this will inevitably lead to a reduction in oil consumption.

“The situation on the market will depend on the degree of supply shortage, and the most pressing issue will be the prospect of global demand against the backdrop of a sharp increase in rates and recessionary trends,” Mikhail Sheibe, commodities strategist at SberCIB Investment Research, explains the trends.

A sharp drop in the ruble can save the Russian budget from a deficit: in order to maintain budgetary stability, the rate will have to be lowered to the level of 70-80 rubles per dollar, the newspaper notes. However, it is quite problematic to influence the ruble exchange rate in the current conditions; the only effective tool the Russian authorities have not yet used is foreign exchange interventions, which they planned to carry out through the resumption of the budget rule. The key problem - the collapse of imports - is still not resolved.

“Demand for the currency remains subdued due to a slow recovery in imports, severe restrictions on the movement of capital and de-dollarization policies pursued by the Bank of Russia, commercial banks and other financial institutions,” Mikhail Vasiliev, chief analyst at Sovcombank, told the publication.

The head of the analytical department of Zenit Bank, Vladimir Evstifeev, agrees that there are certain risks for the budget, which is why he expects the renewal of the updated version of the budget rule in the near future. However, the authorities are not in a hurry to return the budget rule, the Bank of Russia continues to pursue a policy of strict de-dollarization of the economy, squeezing out the currencies of “unfriendly countries” from the financial system. These measures only strengthen the ruble exchange rate.