The Russian Ministry of Finance proposed setting the oil cut-off price at $50 from 2027

The Ministry of Finance of the Russian Federation proposes to set the cut-off price for oil in the budget rule from 2027 at 50 dollars per barrel, with its subsequent annual indexation by 2% from 2031.

“Taking into account the accumulated potential of vulnerabilities in the global economy, the increased level of geopolitical tension and the low size of available budget reserves, from 2027 it is proposed to set the base oil price at $50/barrel with its subsequent annual indexation by 2% from 2031,” says the main directions of the budget, tax and customs tariff policy for 2027 and the planning period of 2028 and 2029

The Russian Cabinet of Ministers on Wednesday submitted to the State Duma a draft federal budget for 2027-2029 and a package of documents for it.

The Ministry of Finance of the Russian Federation included in the draft budget for a three-year period a smooth transition to the budget rule by 2029, Finance Minister Anton Siluanov previously stated. Now the budget rule in Russia operates in a relaxed version, that is, the maximum amount of expenditures provided for in the budget law exceeds the target, structural level (financed from structural, that is, revenues that do not depend on the temporary situation).

The budget rule limits spending by setting a cut-off price for Russian Urals crude. If the actual price turns out to be higher than this cutoff, additional budget revenues are directed to replenish the National Welfare Fund (NWF). And if the price of oil falls below this level, then the Ministry of Finance has the right to cover the resulting budget deficit from the fund.