Russia's Flagship Oil Urals Tumbles Toward $50 in Global Rout
A plunge in global oil prices has driven down the price of Russia's flagship grade Urals toward $50 a barrel, raising pressure on the state budget as the Kremlin ramps up defense spending for its war on Ukraine.
The country's Urals grade from the Baltic Sea port of Primorsk slumped to $52.76 on Friday, data from Argus Media show. The country's barrels have traded at deep discount to the global benchmark Dated Brent ever since the invasion began, more than three years ago.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
9 hours ago
- Miami Herald
Russian Economy Faces Collapsing Oil Profits, Non-Viable Refineries
Russia's sanctions-hit economy has been left reeling by falling fossil fuel revenues and a slump in profitability in the country's oil refineries. Figures released by Russia's state statistics agency Rosstat showed nearly a halving of profits from oil and gas, which are essential to the government balancing the books. The figures come as Russia's finance ministry reported an increase in its budget deficit and amid warnings about the impact of a new round of European Union sanctions on Moscow. Newsweek has contacted Russia's finance ministry for comment. Russia's economy has been impacted by a fall in global oil prices, the strengthening of the ruble and tougher sanctions imposed because of Vladimir Putin's full-scale invasion of Ukraine. Fossil fuels are at the heart of Russia's economy and fund Putin's plans for record military spending. Increasing sanctions appear to be having an impact on the key revenue generator, which could be used as leverage to stop Russian aggression. Rosstat reported that profits from Russian oil and gas companies in the first quarter of 2025 fell to 789.5 billion rubles ($10 billion) compared with 1.445 trillion rubles ($18 billion) for the same period in 2024, The Moscow Times reported. The outlet added that the profitability of oil refineries making petroleum products had slumped in figures that come hard on the heels of data from Russia's Finance Ministry. It reported the country's oil revenues had fallen by 35 percent to 512.7 billion rubles (about $6.55 billion) in May compared with the same month the previous year. Amid a global slump in the price of Russia's key export, the country's Urals grade has dropped from $66 a barrel at the start of the year to $52 by the end of May. As Russia faces a slump in oil revenues, its finance ministry said on Tuesday that Russia's budget deficit had increased by 168 billion rubles ($2.18 billion) in May. This is five times higher than for the same period in 2024 and nearly equal to the entire deficit planned for the full year—3.8 trillion rubles ($49.4 billion), or 1.7 percent of GDP. It also brings the total deficit for the first five months of 2025 to 3.4 trillion rubles ($44.2 billion), or 1.5 percent of GDP. Vasily Astrov, from the Vienna Institute for Economic Affairs, told Newsweek on Wednesday that monthly budget figures should not be over-interpreted because of the extreme volatility of spending. Before the war, Russian government spending was evenly spread throughout the year but since 2023 has been front-loaded early in the year for military expenditures. Astrov said that last year, because of this front-loading in the first few months, many predicted a catastrophic budget deficit for the full year, which did not materialize. But it is extremely likely that the deficit for the full year 2025 will exceed the official 1.7 percent target and could end up as high as 3 percent of GDP, Astrov added. However, Russia's dependence on energy revenues has declined substantially over the past few years—from 40 percent before the war to around 30 percent last year, and will be even smaller this year, Astrov added. Dwindling oil and gas profits are eating into Russia's National Wealth Fund which could be exhausted by 2026 if current economic trends persist, the Russian Presidential Academy of National Economy and Public Administration (RANEPA) and the Gaidar Institute have warned. As of June, the fund held 2.8 trillion rubles ($36.4 billion) in liquid assets, its lowest level since 2019, a decline from the prewar peak of $113.5 billion because of growing budget deficits, infrastructure investments and state bailouts. Tymofiy Mylovanov of the Kyiv School of Economics on X: "Russia's oil exports fell 29 percent in the final week of May.. the sharpest weekly drop in since full scale invasion. EU sanctions are biting hard, disrupting loadings, payments, and insurance." European Commission President Ursula von der Leyen on Tuesday: "Oil exports still represent one-third of Russia's government revenues. We need to cut this source of revenues," Vasily Astrov, senior economist at the Vienna Institute for International Economic Studies told Newsweek: "It is extremely likely that (Russia's) deficit for the full year 2025 will exceed the official 1.7 percent will end up somewhere between 2-3 percent of GDP." On Tuesday, the European Union proposed its 18th round of sanctions against Moscow to pressure it into accepting a 30-day unconditional ceasefire in Ukraine, which could add to turbulence in Russia's economy. The measures include targeting banks and vessels of Russia's sanctions-busting shadow fleet of vessels that transport oil. The reduction of a price cap for seaborne Russian oil from $60 to $45 per barrel could also cause further pain for the country's budget, analysts have predicted. However, the package requires the backing of all EU members and could be thwarted by vetoes from Slovakia and Hungary, which are considered Moscow's closest allies in the EU. Related Articles Mette Frederiksen: Denmark's PM on Trump, Russia and Greenland's FutureMap Tracks Russian and Chinese Spy Ships Loitering off Coast of US AllyTelegram Messenger's Ties to Russia's FSB Revealed in New ReportRussia Expands Military Cooperation with North Korea 2025 NEWSWEEK DIGITAL LLC.
Yahoo
2 days ago
- Yahoo
Key to Russia's potential defeat lies in its economy
As the war in Ukraine grinds on, attention remains fixed on the battlefield. But Russia's most vulnerable flank is not in the trenches — it's in the treasury. The West, and especially the United States, holds economic levers that could push Vladimir Putin toward serious negotiations or even collapse his ability to sustain the war altogether. Recent developments signal a shift in Washington's posture. Military aid to Ukraine has resumed, and a landmark U.S.-Ukraine resource agreement was signed on April 30. More significantly, senators — led by Republican Lindsey Graham — are advocating sanctions that would impose 500% tariffs on Russian oil and commodity exports. Moscow has reacted with alarm, calling this initiative a 'counteroffensive from the American deep state.' It's no bluff. The Kremlin is right to be worried. What truly threatens Putin's war machine is energy revenue — or rather, the loss of it. The Russian economy is deeply dependent on oil and gas exports, with the 2025 federal budget based on an oil price of $70 per barrel. But Russian Urals crude is now priced around $60, and could fall further. Saudi Arabia, frustrated by non-compliance within OPEC+, is allowing oil prices to drop, potentially triggering a price war. Riyadh has openly stated it can withstand a prolonged period of low prices — a veiled threat aimed at Moscow and other OPEC+ defectors. Read also: Exclusive: Russia's ballistic missile production up at least 66% over past year, according to Ukrainian intel figures The effects are already visible. Russia has slashed its oil revenue forecast for 2025 by 24%, with the Finance Ministry predicting a drop from 11 trillion to 8.3 trillion rubles. The country's oil production could decline by up to 50% by 2030, largely because newer reserves are technically difficult and capital-intensive to extract. That's why Moscow is quietly seeking Western — specifically U.S. — expertise to develop these fields. A coordinated, firm sanctions regime from Washington and Brussels could shut that door completely. Simultaneously, the U.S. and Saudi Arabia are deepening their energy partnership, particularly in liquefied natural gas (LNG). Saudi Aramco has reportedly signed memoranda of understanding with American LNG exporters like NextDecade and Sempra. The latter already holds a major supply contract with Poland's Orlen, and the U.S. is now poised to become a key alternative gas supplier to Central and Eastern Europe. These investments will expand global LNG capacity and bring prices closer to the U.S. Henry Hub benchmark — lowering Europe's dependence on Russian gas. Poland and Ukraine are moving to capitalize on this trend. Warsaw has announced plans for a second floating LNG terminal, which could eventually supply Slovakia and Hungary — two nations historically reliant on Russian gas. Ukraine, meanwhile, is gaining investor interest now that the U.S. has committed to a joint Reconstruction and Investment Fund, funded through future resource extraction projects. For the first time since the full-scale invasion began, Western business sees a path forward in Ukraine's energy sector. The implications for Russia are grave. Military spending has ballooned to 6.3% of GDP — its highest level since the Cold War — while the budget deficit continues to rise. To fund its war, the Kremlin is raiding reserves, raising taxes, and cutting social programs. Absent war spending, Russia might already be in recession. The regime increasingly relies on military conflict to justify domestic hardship and consolidate power. Read also: Inside Russia, calls for peace come with conditions — and Kremlin talking points But the geopolitical landscape is shifting. The combination of low oil prices, expanding LNG competition, and targeted U.S. sanctions could inflict sustained economic damage on Russia without risking American or European lives. Energy diplomacy, not just weaponry, could determine the outcome of this war. The next steps are critical. The White House must maintain pressure — not just by providing Ukraine with military aid, but by deepening its energy cooperation with allies and enforcing robust sanctions. The message to Moscow should be clear: the price of continuing the war will be economic asphyxiation. If the United States can coordinate its economic tools with allies in Europe and the Middle East, Russia may find itself unable to afford the very war it insists on waging. Submit an Opinion Editor's Note: The opinions expressed in the op-ed section are those of the authors and do not necessarily reflect the views of the Kyiv Independent. We've been working hard to bring you independent, locally-sourced news from Ukraine. Consider supporting the Kyiv Independent.
Yahoo
6 days ago
- Yahoo
Russian Urals oil to India sells at narrowest discounts since 2022, traders say
MOSCOW/NEW DELHI (Reuters) -Discounts for Russian flagship Urals crude oil for delivery to Indian ports in July hit their narrowest levels since 2022 as spot supplies have tightened, four traders involved in the market said on Friday. Narrowing discounts and tight spot supplies are nudging Indian refiners to scout for alternatives through buying tenders. Spot discounts for Urals crude narrowed to $2.25 per barrel on average for cargoes arriving in India in July, from $2.70 to $3.10 per barrel to dated Brent on delivery ex-ship (DES) basis in the previous month, the sources said. That is the narrowest discount for Urals oil cargoes sold to India since the Ukraine war broke out in 2022. India became the largest buyer of Russian seaborne crude after Moscow diverted its energy supply away from the European Union which imposed a ban. Some Indian refiners which do not have long-term supply agreements with Russian oil companies are not getting enough Urals oil in July, the sources said. India's largest private refiner, Reliance Industries, locked in a term supply contract with Russian oil giant Rosneft last year, which reduced the availability of Urals in the spot market, they said. Russian oil traders cited higher demand for the grade from refiners in Turkey, which has recently increased buying, boosting competition with Indian refiners over the supply. Turkey's largest oil refiner, Tupras, resumed buying Urals in April after stopping earlier this year, because of tougher U.S. sanctions on Moscow. Two of the traders also said improving refining margins globally also helped boost Russian oil demand as refiners are eager to increase crude runs. India remains the biggest buyer of Russian Urals oil by sea, with imports hitting a 10-month high in May. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
