Russia’s Economy Ministry Lowers 2025 Oil Price Forecast

Russia’s Economy Ministry has revised its oil price forecast for this year in a recent update to its baseline scenario, aligning with current trends in the global oil market. According to Interfax, the new projection anticipates an average of $68 per barrel for Brent crude, a decrease from the previous forecast of $81.7 per barrel in September 2024. The ministry also adjusted its oil price outlook for the next two years, predicting an average of $72 per barrel for Brent crude in 2026, down from $77, and remaining at $72 in 2027, compared to the earlier estimate of $74.5 per barrel. The ministry anticipates an average price of $56 per barrel for Urals, Russia’s primary export blend, this year. This price falls below the G7 price limit established to restrict Russia’s oil revenues, potentially allowing exporters to utilize Western insurance and tankers for oil shipments, unless the G7 decides to reduce the cap, as some members have previously proposed. A ministry spokesperson noted the fluctuating nature of oil price forecasts, describing the 2025 forecast as relatively conservative and realistic, especially concerning the budget and national wealth fund. The recent decline in oil prices, attributed to various factors including trade tensions, oversupply concerns, a stronger ruble, and prospects of peace in Ukraine, has raised concerns about its impact on the Russian economy. The central bank governor warned that prolonged tariff conflicts could lead to reduced global trade, economic downturns, and lower demand for Russian energy resources, posing risks to the economy.