OPEC+ is increasing oil production: how will this affect Russian revenues
The member countries of the OPEC+ oil cartel have announced their intention to increase oil production by about 411 thousand barrels per day. This could have a significant impact on the market, lowering oil prices, which would have a negative impact on russian budget revenues.
▫️ This decision by OPEC+ is likely due to the fact that Saudi Arabia, the de facto leader of the organisation, doesn’t want to continue to artificially restrain production, given that some cartel countries do not comply with the limits.
In January this year, US President Donald Trump said he would ask OPEC+ countries to reduce oil prices, arguing that this would make it impossible for russia to continue its war against Ukraine.
The budget of the russian federation is critically dependent on oil prices, as the cost of the war has left russia with no resources to balance fluctuations in the commodity market. The day before, the russian government was forced to urgently revise the budget for 2025, given the record budget deficit due to lower oil prices.
A further decline in global oil prices could have an even more significant impact on both russia’s ability to wage war and the living standards of ordinary russians.
