The decline was largely due to the strengthening ruble, which has risen about 45% since the beginning of the year, due to calm geopolitical tensions and tightening monetary policy by the Russian Central Bank.
Meanwhile, international oil prices in USD have lost about 10% of their value.
According to estimates, the average price of Russian mixed-use oil, used for tax calculation, reached 4,701 rubles/barrel ($60/barrel) in the first two weeks of July, almost unchanged from the level in June but 11.1% lower than the target adjusted in the budget.
Last week, the Russian Finance Ministry said that the budget deficit in the first half of the year reached 3,690 billion rubles (equivalent to 47.31 billion USD), accounting for 1.7% of GDP, equal to the expected level for the whole year.
In April, Russia raised its estimated 2025 budget deficit to 1.7% of GDP, up from the previous estimate of 0.5%. The estimate for the shortfall comes after lowering the forecast for energy revenue to 24% amid expectations of oil prices remaining low for a long time.
State spending on national defense in 2025 will increase by 1/4, to 6.3% of GDP, the highest since the Cold War, as the Russian conflict in Ukraine has entered its fourth year.
The unstable economic situation along with increased oil production from OPEC+ (Organization of oil Exporting Countries and allies, including Russia) has put pressure on the oil market.
Oil prices in rubles were determined based on an average exchange rate of 78.39 rubles to 1 USD in the first 2 weeks of July and an average oil price of 59.97 USD per barrel.
The Russian government has set a target of oil prices reaching 5,281 rubles per barrel ($67.5/barrel) at a exchange rate of 94.3 rubles to 1 USD, while oil prices in USD are fixed at $56 per barrel.
