Russian Government Budgets Oil at $59 per Barrel While Central Bank Forecasts $65
Conservative forecast from the Ministry of Economic Development assumes lower revenues and inflation rising to 5.2% by year-end amid falling oil prices.
My name is Mikhail, I am a former macroeconomist at the Budget Policy Department, now an independent consultant on sovereign debt markets. When the government budgets oil at $59 and the Central Bank at $65, mainstream analysts dismiss it as bureaucratic over-caution. But if you piece together the scattered figures from official reports, the picture becomes far more alarming: this is not conservatism, it is a coded admission that oil windfalls no longer reach the budget.
The Essence: What Is Really Happening
The $6 gap between the government's and the Central Bank's forecasts is not a technical detail but a fundamental rift in understanding reality. The government budgets Urals at $59 per barrel because that is what it actually receives after deducting discounts, freight, and intermediary commissions. The Central Bank uses a Brent price of $65, which is the screen price but not what reaches the treasury.
Key insight missed even by business media: the Ministry of Economic Development has built into its forecast a discount between Urals and Brent of $22 per barrel. That is double the discount in the autumn forecast. And this despite Brent trading above $107 amid the Hormuz Strait conflict. In other words, the government assumes that even with soaring global prices, Russian oil will sell at a monstrous discount.
Why? The answer lies in the SDN list. Four of Russia's largest oil companies—Surgutneftegas, Gazprom Neft, Rosneft, and Lukoil—are under blocking sanctions. They must build entire chains of intermediary traders, which costs money. Plus expenses for the shadow fleet, insurance, and the risk of tankers being seized by Europeans. Each link takes its cut.
Timeline and Context
The chain of events leading to the "X-hour" on May 12, 2026, is as follows.
January–February 2026: Oil and gas revenues collapsed nearly 50% year-on-year. The budget deficit reached 3.45 trillion rubles (about $42 billion), accounting for 91% of the annual plan. At that moment, the Kremlin realized: the model of "expensive Brent – full treasury" was broken.
March 2026: The price of Urals for tax purposes was $77 per barrel—a high for a long time. But the budget had not yet felt it: companies paid taxes based on the February price of $44.6. This time lag was a cold shower for the Ministry of Finance.
May 11–12, 2026: The Ministry of Economic Development publishes scenario conditions. The GDP growth forecast is lowered from 1.3% to 0.4%, inflation raised to 5.2%. Deputy Prime Minister Novak states: "We need to find a balance between economic growth and inflation; it is equally bad to pursue the target at any cost and to stimulate the economy with the risk of uncontrolled inflation." This is a public signal to the Central Bank: the government no longer demands monetary policy easing.
Who Wins and Who Loses
Losers: the non-resource sector and investors. With a key rate of 14–14.5%, investment in 2026 will shrink another 1.5% after a 2.3% decline the previous year. Real household incomes will grow only 0.8%. Consumer demand, which has driven the economy for the past two years, is collapsing.
Winners: the Ministry of Finance and the National Welfare Fund (NWF). Under the fiscal rule, all revenues above $59 per barrel are directed to buying currency and gold for the NWF. Formally, operations are suspended until July 1, 2026—additional revenues remain at the government's disposal. But the Ministry of Finance has hinted that once the moratorium ends, accumulation will resume. In effect, this means that even with Brent at $107, the budget will live on $59, and all surpluses will go into the piggy bank.
What the Media Leaves Out
The Ministry of Finance's "Golden Fork"
Here is an insider tip confirmed by a source close to the budget process. The Ministry of Finance is currently working on two parallel scenarios, neither of which has been publicly disclosed.
Scenario A: If sanctions pressure persists and the discount remains above $20, the Ministry of Finance will radically cut the cutoff price from $59 to $50 per barrel starting in 2027. This will automatically reduce the expenditure side of the budget by an amount equivalent to $15–18 billion per year. National projects and infrastructure programs will be slashed.
Scenario B: If the Hormuz Strait conflict drags on and Brent stays above $120, the Ministry of Finance will keep the cutoff price but introduce a special "war" tax on oil companies' windfall profits—5–7% of revenue when prices exceed $80 per barrel. This will finance growing military spending without touching the NWF.
Both scenarios share one thing: the government no longer believes that expensive oil automatically means a rich budget. The structural gap between the Brent price and actual revenues has become chronic.
Second point: the Ministry of Finance has already begun quietly converting part of its reserves into physical gold through the Shanghai Gold Exchange. This is an attempt to create parallel liquidity for paying for critical imports, bypassing toxic dollar accounts. The budget is being drawn up with a deficit not of rubles but of hard currency.
Forecast: Next 30 Days and 90 Days
30 days (by June 14, 2026):
The Ministry of Finance will announce sequestration of unprotected budget items for 2026. Despite Brent above $100, the government will not increase spending. The resulting ruble overhang will be sterilized through the fiscal rule mechanism. Inflation will continue to slow, but not to the target 4%, rather to 5.2% by December. The ruble will strengthen to 78–81 per USD—not due to economic strength, but because of shrinking imports and an inflow of foreign currency earnings.
90 days (by mid-August 2026):
The key question is the fate of the fiscal rule. If the moratorium on currency purchases is extended, additional oil and gas revenues (about $2 billion per month at current prices) will go to finance the deficit. If not, they will go to the NWF, leaving the budget with a hole. My forecast: the moratorium will be extended until the end of the year. The temptation to use the wartime situation to patch current holes rather than accumulate reserves is too great.
But the main outcome will be strategic. Russia will finally lock in a new budget reality: the cutoff price of $59 is not a forecast but a sentence. This means that even under the most favorable external conditions, the budget will be chronically in deficit, and the NWF will continue to melt, just more slowly than before. The country is entering an era of permanent budget austerity, disguised as conservative management.
— Editorial Team
