The Decline in Oil and Gas Revenues Has Made a Hole in russia’s Budget

russian authorities intend to sell yuan and gold from the national wealth fund (nvf) for a total of 424.9 million dollars. The aim is to get money to cover the budget deficit over the loss of oil and gas revenues in March.

The main reason for the decision was the fall in the price of russian Urals oil to USD 50 a barrel. In January – March, russian oil price fell by 13 % and is almost by $20 lower than the budgeted price for the current year. At this price for a russian barrel, the fund’s resources would serve for a year, but the situation is exacerbated by the ruble’s depreciation.

The decision was also influenced by russia’s reducing its oil production. As of April 1, russia produces about 9 million barrels a day (in 2024 it produced 10 or more million barrels a day). This led to a 17 % reduction in oil and gas revenues in the rf’s budget in March, and a 10 % reduction in the first quarter of 2025.

The Foreign Intelligence Service of Ukraine reminds that in January-February 2025, the russian budget deficit increased to 44.58 billion US dollars. This exceeds the liquid part of the russian national wealth fund by 14 % (as of April 1, it was $39.1 billion), and its further reduction will significantly increase the risks to the russian economy, as there is as little free money in the fund as there has never been since its creation in 2008. The fund, which was originally created by the kremlin to finance pensions, has now been turned into a rainy day fund.

The Foreign Intelligence Service of Ukraine forecasts that in the short term, the increase in sales volumes of yuan and gold from the russian nvf will partially stabilize the ruble and allow for a short-term avoidance of rapid devaluation. However, this solution is temporary, and the ruble will continue to decline in May.