Consequences of Israel's strike on Iran: Urals oil price jumps, saving russian budget

Israel's war with Iran has become a "lifeline" for the russian budget, which is experiencing a sharp drop in oil export revenues.

Economic Pravda reported this with reference to The Moscow Times.

The report says that the ruble price of russian Urals oil, on which every fourth ruble in the budget depends, jumped by almost 15% in a few days of the conflict.

As of June 13, Urals cost RUB 5,000 per barrel, although on June 10 it was sold for less than RUB 4,400 - the minimum price for the past two years.

So far, however, the price of Urals has not yet reached both the level initially expected by the government (RUB 6,700 per barrel) and the revised forecast of the Ministry of Economic Development, based on which the budget was recalculated in May (RUB 5,300 per barrel).

In the first quarter, the ruble price of Urals was at RUB 5,900.

And this led to a 10% drop in budget oil and gas revenues in January-March.

By May, according to the Ministry of Finance, the decline had turned into a 34% collapse, and the amount collected from raw material companies - RUB 512.7 billion - became the lowest since January 2023.

According to the new government plan, the budget should receive RUB 8.3 trillion in oil and gas taxes per year - RUB 2.6 trillion less than the authorities initially planned RUB (10.9 trillion).

And its deficit will be more than three times higher than planned and will become a record since the pandemic - RUB 3.8 trillion.

The closure of the Strait of Hormuz, a narrow artery between the Persian and Oman Gulfs, through which almost all OPEC oil is transported, can raise oil prices to triple-digit levels.

The Iranian authorities on Saturday threatened to block shipping through the strait after Israel attacked oil storage facilities and infrastructure at the country's largest gas field, South Pars.

If the Iranian threat is realized, this could lead to a sharp surge in oil prices to triple-digit values ​​per barrel, and the USD 130 bar may not be the upper limit for growth.

In the event of limited mutual shelling, oil prices will add only USD 5 compared to pre-war levels, analysts believe.

As the Ukrainian News agency earlier reported, the average price of russian oil, calculated for tax purposes, in May fell below RUB 4,000 per barrel for the first time in three years, which is 41% lower than the level used when planning the russian budget revenues for 2025.

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