Rouble Strength and Lower Crude Push Russian Oil Down 11%

Key Moments

Rouble-Based Oil Pricing Slides from April Peak

Investing.com — The value of Russian oil priced in roubles declined sharply in May, pressured by a stronger domestic currency and weaker global crude benchmarks linked to expectations of a deal to end the Iranian war, according to Reuters calculations released on Tuesday.

From May 1 to May 22, the average price retreated to 6,518 roubles per barrel, an 11% drop from April’s average level of 7,299 roubles per barrel. The April figure had been the highest since October 2023.

Tax Framework and Budget Planning Impact

Russian authorities rely on the rouble-based oil price as a key input for calculating the mineral extraction tax on oil production. This tax is described as the largest single levy on the domestic oil sector and is estimated to contribute around one-fifth of total federal budget revenues.

The current price level in roubles still stands roughly 20% above the benchmark embedded in Russia’s federal budget for 2026. That budget framework is based on an assumed price of 5,440 roubles per barrel, or $59 per barrel, using an exchange rate of 92.2 roubles per U.S. dollar. This reference price underpins projected government spending and income.

Geopolitics and Global Crude Market Dynamics

The budget assumption was set ahead of U.S.-Israeli airstrikes on Iran at the end of February, which led to an escalation of conflict in the Middle East and disruptions to energy supplies.

On Tuesday, international crude prices were trading just under $100 per barrel, easing back from earlier peaks above $120 recorded in April.