According to the Financial Times, the decline in oil prices caused by the trade war initiated by U.S. President Donald Trump has significantly impacted the military budget of Russian dictator Vladimir Putin. This is occurring against the backdrop of attempts by the American president to establish relations with the Kremlin.
This is reported by Бізнес • Медіа
It is expected that the revenues of the Russian Federation’s budget, about 33% of which are generated from oil and gas, could be ₽1 trillion (2.5%) lower than planned for this year if crude oil prices remain at their current level. This, in turn, could slow down GDP growth by 0.5 percentage points. Such a situation will force the Kremlin to seek ways to increase borrowing, reduce spending on non-military needs, or utilize reserves.
Decline in Russian Oil Prices and Foreign Investment
The average price of Russian Urals crude oil has fallen to its lowest level in two years, approximately $50 per barrel, while the budget of Russia is based on a price of $69.70.
According to data from the Central Bank of Russia, following the onset of the full-scale war, the volume of foreign direct investment in the real sector decreased by 57%, totaling $216 billion, the lowest figure since 2009. In the first year of the invasion, Russia lost $138 billion in foreign investment, in 2023 another $80 billion, and last year an additional $63 billion. In total, this amounts to over 50% of Russia’s annual budget (₽41 trillion).