A decrease in the average price of Urals oil will not interfere with the budget plans of the Ministry of Finance
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In November, the average price of Russian Urals oil will be about 6.3 thousand rubles. versus 7.4 thousand rubles. in October. The drop was due to both lower dollar prices and the strengthening of the Russian currency. However, current price levels are around 6 thousand rubles. still higher than the estimated value budgeted by the Ministry of Finance. If their level remains the same until the end of the year, the volume of oil revenues in November-December will amount to 1.27 trillion rubles, analysts assume.
According to ProFinance, the ruble price of oil on November 28 dropped during trading to 5.97 thousand rubles. per barrel, a value close to the minimum since July 21. This is 0.7% below the market closing level on November 27 and almost 26% below the one and a half year high set on October 20 (8 thousand rubles). However, in the afternoon there was a correction, and quotes again rose above 6 thousand rubles. Even taking this into account, the average Urals value since the beginning of the month has dropped by 15% compared to October, to 6.25 thousand rubles.
The decline in oil prices is primarily due to falling prices on the world market.
According to Investing, on Monday the price of European Brent oil fell below $80, to $79.4 per barrel. On Tuesday, quotes rose above $81 per barrel, but even taking into account the correction that occurred, prices are 14% lower than the levels of the second ten days of October. According to ProFinance, over five weeks the price of Urals decreased by 16%, to $69 per barrel.
“The oil market is under pressure due to the uncertainty of the results of the OPEC+ meeting on November 30, despite emerging information that the organization has reached agreements with Angola and Nigeria on production volumes,” notes Evgeniy Mironyuk, stock market expert at BCS World of Investments.
Anton Siluanov, Minister of Financein an interview with Rossiya 24 on October 10:
“The first half of the year did not develop as, let’s say, as optimistically as we would have liked. Since August, the situation has changed, and additional oil and gas revenues will be used to increase the National Welfare Fund.”
The effect was enhanced by the strengthening of the Russian currency. During Tuesday’s trading, the dollar exchange rate on the Moscow Exchange dropped to 88.54 rubles/$, which is 26 kopecks. below the values at the beginning of the week. At the end of the day, the rate stopped at 89.44 rubles/$, which is 63 kopecks. higher than Monday’s closing values, but by 7.6 rubles. below the values on October 19. The ruble is mainly strengthening its position against the backdrop of delayed effects of high oil prices, which persisted in previous months, as well as due to government measures to strengthen control over foreign exchange earnings of exporters.
In total, these factors, says Vladimir Evstifeev, head of the analytical department of Zenit Bank, have deprived the potential of speculative strategies aimed at devaluing the national currency.
A fall in the average oil price is negative for the budget, but does not pose high risks for it.
For 2023, the budget was drawn up based on the Urals price of $70.1 per barrel and the average ruble exchange rate of 68.3 rubles/$, which corresponds to an average cost of 4.8 thousand rubles. Actual prices since the beginning of the year still significantly exceed the budgeted level and amount, according to Kommersant estimates, based on ProFinance data, to 5.4 thousand rubles.
“If the ruble price of oil remains at the level of 6 thousand rubles. per barrel, oil and gas budget revenues in November could amount to 620 billion rubles, and in December – about 650 billion rubles,” notes Mr. Evstifeev.
According to Sovcombank chief analyst Mikhail Vasiliev, the federal budget deficit in December will amount to about 1.9 trillion rubles, and for the year as a whole – 3.1 trillion rubles. “We expect to see budget revenues at the level of 29.2 trillion rubles, expenses – 32.3 trillion rubles,” explained Mr. Vasiliev. Last week, Finance Minister Anton Siluanov estimated the year-end deficit at 1% of GDP (RUB 1.8 trillion). In 2022, 3.29 trillion rubles were not enough to fulfill the budget. or 2.1% of GDP.
Despite the continued decline in oil and gas revenues, analysts do not expect changes in the Ministry of Finance’s borrowing policy on the open market, but do not rule out exceeding the quarterly plan.
In the fourth quarter, the ministry plans to place OFZs for only 500 billion rubles. This plan has already been completed by almost 88%, so the Ministry of Finance can maintain a conservative approach to satisfying applications. According to Mr. Vasiliev, the ministry will continue to offer fixed-rate bonds to the market as long as there is demand for them.
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