Fuel for the budget: Russian Urals oil has risen in price almost four times over the year

Oil of the Russian Urals brand has risen in price almost fourfold over the past year.

So, back in the middle of spring 2020, the cost of raw materials in North-Western Europe and the Mediterranean was $ 16 and $ 16.5 per barrel, respectively, and by the end of April 2021 the value reached $ 61.6 and $ 62.7 per barrel.

The specialists of the analytical agency Argus told RT about this.

“In March-April 2020, the Urals price reached record lows since the beginning of 2002.

The reason for this was the decrease in global demand for energy resources due to the drop in economic activity in the world due to the pandemic, ”explained Viktor Parno, Vice President for Business Development in Russia, CIS and Baltic countries, Argus.

“Over the past year, quotations have grown against the background of a gradual recovery of the economy and fuel consumption,” the specialist added.

In addition, the weakening of the dollar on the international market contributed to the rise in oil prices, according to experts interviewed by RT.

Over the past 12 months, the corresponding DXY index has dropped by almost 9% and is now close to 91 points.

“The cost of energy resources is increasing due to the policy of large-scale infusion of money from the side of central banks to stimulate their economies.

First of all, we are talking about the US Federal Reserve.

The actions of the American Federal Reserve increase the availability of loans, but weaken the dollar, in which oil prices are measured, ”said Mark Goikhman, chief analyst at TeleTrade Group, to RT.

However, one of the main reasons for the increase in oil prices was the successful completion of the OPEC + deal.

This point of view, in an interview with RT, was expressed by Dmitry Chekalkin, vice president of the St. Petersburg International Commodity and Raw Materials Exchange.

“The position of the countries participating in the OPEC + agreement remains an important factor in pricing in the commodity markets.

Largely due to production cuts, they removed from the market a potential 8.5 million barrels of oil per day, which is a lot in the current conditions, ”the specialist emphasized.

As a reminder, under the OPEC + agreement, large oil-exporting states restrict the production of energy raw materials to restore the balance between supply and demand in the global hydrocarbon market.

Such a policy should keep oil prices from sharp fluctuations.

In early spring 2020, amid disagreements within the alliance, OPEC + members decided to suspend the deal, which resulted in an unprecedented collapse in oil prices.

This state of affairs forced the exporters to sit down at the negotiating table again, and from May 1, 2020, the parties resumed their partnership.

• View of the tank cars at the railway station

• AGN "Moscow"

Also, the peculiarities of its composition play in favor of the current rise in prices for Russian oil.

As explained by Victor Parno, Urals grade raw materials are characterized by a high sulfur content, while the reference Brent and American WTI are considered lighter grades.

“From time to time, the market situation develops in such a way that medium-heavy varieties become more popular than light ones.

In terms of supply volumes, Urals is now the most demanded oil grade in Europe.

The main importers in the region are Germany, Poland, the Netherlands, Belgium, France and a number of other EU countries, ”the expert emphasized.

According to him, China is also among the main buyers of Russian oil.

Note that in the first three months of 2021, Russia supplied to China about 21.4 million tons of raw materials worth almost $ 8.9 billion.As a result, Moscow retained its status as one of the largest exporters of energy resources to the Asian republic.

This is evidenced by data from the Chinese customs department.

“Besides China, Japan is considered an important buyer of Urals in the Asian region.

It should be noted that Russian oil is also popular in North America.

For example, the United States is actively buying our raw materials, ”said Alexander Rozman, senior analyst at Forex Optimum, to RT.

Fuel support

Experts note that the growing interest of foreign partners in Urals purchases may have a positive effect on the state of the Russian budget.

The record drop in global demand and commodity prices observed in the spring of 2020 led to a sharp decline in treasury revenues.

As a result, according to the Ministry of Finance, from January to December last year, budget expenditures exceeded revenues by 4.1 trillion rubles (3.8% of GDP).

According to the approved draft budget, in 2021 the deficit should be reduced to 2.75 trillion rubles (2.4% of GDP), and in 2022 - to 1.25 trillion (1% of GDP).

Meanwhile, if oil prices remain at high levels, the negative difference between revenues and expenditures of the Russian treasury will decrease at a more confident pace, says Alexander Rozman.

Recall that for 2021, the Russian budget provides for the base oil price at $ 43.3 per barrel.

Within the framework of the budget rule, if commodity quotations fall below this mark, the lost oil and gas revenues are compensated by the funds of the National Welfare Fund (NWF).

If the cost of raw materials on the market rises above this indicator, the surplus profits, on the contrary, are directed to the NWF.

“If in the long term the prices for energy resources remain at their current values, then the oil revenues of the Russian treasury may turn out to be 30-50% higher than it was originally planned in the budget for this year.

Accordingly, the budget deficit by the end of 2021 will be much smaller, ”said Rozman.

According to Viktor Parno's forecast, prices for the Russian grade of oil have already stabilized and by the end of the year will be in the range of $ 60-65 per barrel. However, according to Mark Goikhman, in the event of a confident recovery in global demand for raw materials and the completion of the OPEC + deal, the cost of Urals may rise to $ 75 per barrel during 2021.