A sharp decline in global oil prices, triggered by US President Donald Trump’s imposition of new tariffs, is posing a significant risk to the Russian economy, according to Russia’s central bank governor, Elvira Nabiullina.
The central bank is currently analysing the impact of this downturn, with a technical budget rule expected to help cushion the blow to Russia’s public finances.
As of April 7, Brent and WTI crude prices fell by 14 per cent and 15 per cent, respectively, after Trump’s announcement of “reciprocal tariffs” on all imports.
This marked the steepest drop in oil prices since the COVID-19 pandemic, with Brent crude hovering near US$60 per barrel and Russia’s Urals blend falling below US$50 per barrel for the first time since June 2023.
“You are absolutely right that the main channel of influence may be through changes in oil prices, specifically a decrease in oil prices,” Nabiullina stated to the Russian lower house of parliament.
She further warned: “If such tariff wars, and we are seeing an escalation of tariff wars, continue, it usually leads to a decline in global trade, the global economy and possibly even the demand for our energy resources.”
The central bank has highlighted that US tariff increases could slow global economic growth and raise inflation, potentially resulting in lower-than-expected oil prices for several years.
According to its latest projections, oil prices are expected to average US$65 per barrel in 2025 and $60 per barrel in 2026, though these forecasts may be revised at the next board meeting on April 25.
Nabiullina emphasised the importance of Russia’s fiscal rule, stating: “When oil prices fall, the government always has the means to support budget expenditures despite lower revenues from oil.
“We’ll keep watching how the situation evolves, but the fiscal rule will provide support.”
Despite mounting sanctions, Russia’s oil and fuel export revenues rose to US$15.8 billion in January, a US$900 million increase from December, according to the International Energy Agency.
This was attributed to higher oil prices and stable export volumes earlier in the year.
However, new US sanctions against Russian oil companies and tankers linked to the ongoing conflict in Ukraine have complicated crude exports, especially to Asia, making them more costly and complex.
The Russian government had based its 2025 budget on an average Urals oil price of US$69.70 per barrel and a rouble exchange rate of 96.5 to the US dollar.
With prices now well below these assumptions, analysts warn that every US$10-a-barrel decrease in export price could mean about $17 billion a year in lost revenues for Russia — roughly 4 per cent of its 2023 export total.
While oil now accounts for about 30 per cent of Russia’s revenues, down from 50 per cent a decade ago, a prolonged slump could weaken the rouble, increase inflation, and force a reassessment of government spending priorities.
As the central bank continues to monitor the volatile situation, Nabiullina reiterated the need for vigilance: “There are risks here, but we need to watch how the situation unfolds, as it’s still in its early stages.”
