the Average price of Russian oil Urals in January-June 2020 decreased in 1,7 times — to 39.68 per barrel with a 65,63 per barrel in January-June of 2019, reported Thursday the Ministry of Finance. In June 2020 Urals cost on average 41,93 per barrel. This is 1.4 times lower than in June a year earlier (61.93 USD per barrel). While this price is not enough for the replenishment of the national welfare Fund (NWF).
Demand for fuel and raw materials in the world will be restored to pre-crisis level not earlier than the end of 2021 according to the optimistic scenario, announced on 2 July, Russian energy Minister Alexander Novak at the international conference “global power and international political risk”, organized by the international discussion club “Valdai”. By April 2022 and is expected to end the international agreement to reduce oil production. These conditions will allow to replenish the Fund of national welfare of the country. Perhaps earlier if the price of oil exceeds $ 50.
the Fund is replenished at cut-off price 42,45 dollars for barrel of Russian oil. This so-called budget rule, and the cut-off price under this scheme is increasing annually 2% of the initial $ 40, is used as the benchmark in 2017.
But that’s not all — planned budget revenues and national welfare Fund can be replenished either by increasing the volume of oil supplies to the world market, or, if the price of oil high by selling smaller volumes of oil. Russia is now on the OPEC agreement+ forced, along with other countries to cut production of 9.7 million barrels a day, so dropping and selling oil on the world market. Oil production in Russia reduced by 18%. And the market price of oil is about 42-43 dollars.
Therefore, revenue sold a smaller volume of oil at this price is still insufficient to cover expenditures. To the NWF started to replenish the necessary oil price of $ 44-50Ares barrel for different volumes of oil sold in such a situation, economists have estimated. The agreement by OPEC regarding production cuts will last until the end of April 2022. Overall comfortable the price indicated in the forecast of socio-economic development of Russia until 2035 — 50 dollars per barrel.
Before the pandemic Russian budget-2020 was approved and designed at a price 42,45 dollars for barrel with incomes 20,38 trillion rubles, expenditures of 19.5 trillion rubles. A budget surplus in 2020 is planned at the level of 876 billion rubles. While GDP was to be 112,863 trillion rubles, inflation of 3%.
the Russian Government plans to increase expenditures of the Federal budget in 2020 to 1.8 trillion rubles. To ll in missing income due to low price of oil, the Ministry of Finance through the Central Bank sells currency from the national welfare Fund (NWF). The Finance Ministry expects the return of expenses in the direction of fiscal rules by 2022.
In General, the Ministry of Finance on the budget rule and buys a currency in reserves to the income from the sale of oil flowing into the Treasury in taxes from oil and gas companies. As already noted, the currency must be bought in the reserves when oil price is higher at 42.4 per dollar in 2020, and, conversely, the currency is sold, if the price of oil below the rule level, and the money received from the sale of currency are used to Finance the budget deficit. The price of Russian Urals oil until consistently above $ 40 since June 5, but is not held on the market above $ 43 more than a week.