Here’s where oil needs to be for Russia to break even
The price of oil in 2016 has averaged roughly $43 a barrel. That’s a far cry from two years ago, when it was more than double. According to Russia’s Federal Customs Service, oil-export revenue accounts for 26 percent of total revenue from Russian exports. For an economy with exports making up almost 30 percent of GDP, that’s fairly significant.
Russia has seen this problem manifest in its ballooning 2016 budget deficit. The budget deficit was $25 billion in 2015, or 2.6 percent of total GDP, according to Russia’s Finance Ministry. But Russia’s finance minister said last September that 2016 budget deficit projections had been revised upward. It could reach 3.7 percent of Russia’s GDP by year’s end.
This is why Russia has been dipping into reserve funds. They’ve also slashed social services and pension benefits.
Written by Jacob Shapiro