Russia's benchmark Urals crude has fallen below the level assumed in the country's 2026 budget after the US-Iran agreement reopened the Strait of Hormuz, increasing the flow of Middle Eastern oil to global markets and putting downward pressure on prices.


According to Yegor Susin on Telegram, managing director of Gazprombank Private, the price of Urals crude has dropped to around $50 per barrel, based on Dated Brent quotations, the benchmark used to price most physical oil shipments worldwide, Caliber.Az reports. 


Brent crude fell to about $72 per barrel on June 25, while the discount applied to Russia's Urals grade widened to around $22 per barrel, Susin said.


The decline marks a sharp reversal from April, when Urals crude traded at $116 per barrel at Russia's western export ports. Prices have now fallen by more than half and slipped below the $59 per barrel level used in Russia's federal budget projections.


Susin estimates that the average Urals price for June, which is used to calculate Russia's oil and gas tax revenues, will be about $63 per barrel. That would be 27% lower than May's average of $86.52 per barrel and 33% below April's average of $94.87 per barrel, the highest monthly level since 2014.


The drop follows the return of global oil prices to levels seen before the recent Iran conflict, with Brent crude trading near $72 per barrel.


As a result, Russia's fiscal pressures are expected to increase in the coming months.


"We should expect Russia's budget problems to intensify in August–September," said Andrei Zatsepin, an analyst at Alor Broker.


Although Russia's oil and gas revenues rose sharply in May—up 70% from January-February levels and 38% year-on-year following the earlier spike in oil prices—the federal budget deficit for the first five months of the year reached 6 trillion rubles (about $76 billion), exceeding the government's full-year target by 1.6 times.


Zatsepin said authorities may need to expand the money supply to finance the deficit and warned that, after the September State Duma elections, the government could introduce unpopular measures, including a windfall profits tax.


Analysts at Vector Capital said one of the government's key fiscal indicators—the price of oil measured in rubles—has fallen back to levels seen before the war in Ukraine.


They noted that record crude exports are helping to cushion the impact. Following repeated attacks on Russian oil refineries, producers have been exporting more unprocessed crude, with shipments from Baltic Sea ports reportedly reaching 2.8 million barrels per day in June, around 1 million barrels per day above earlier estimates, according to Reuters.


However, Vector Capital questioned how much of the exported crude is ultimately being sold abroad rather than refined elsewhere and re-imported into Russia as fuel.


Russia's Finance Ministry initially projected 8.8 trillion rubles (about $112 billion) in oil and gas revenues for 2026. However, revenue from the sector has declined 30% year-on-year over the first five months of the year.


The Accounts Chamber now estimates the federal budget could receive around 1 trillion rubles (about $12.8 billion) less in oil and gas revenue than originally expected, forecasting total annual receipts of 7.8 trillion rubles (about $99.5 billion).


By Sabina Mammadli