An oil noose for the Kremlin: Trump targets price critical to Russia’s budget
14 May 2025 14:31
US President Donald Trump seems to want US oil prices to remain in the range of $40 to $50 per barrel. This is stated in an analytical report by Goldman Sachs Group Inc. based on an analysis of Trump’s posts on social media on this topic, "Komersant Ukrainian" reports citing Bloomberg.
“Trump has always been focused on oil and U.S. energy dominance, posting nearly 900 posts. His indirect preferences for WTI (West Texas Intermediate) seem to be close to $40-50 per barrel, where his propensity to post about oil prices reaches a minimum,”
– analysts say in their report.
Oil prices – both for the global benchmark Brent and the US benchmark West Texas Intermediate (WTI) – often fluctuate under the influence of the US president’s numerous comments on social media, which can relate to everything from OPEC policy and US gasoline prices to sanctions against countries such as Iran. His administration has supported increased domestic production, as well as an overall focus on cheap energy to help reduce inflation.
“[Trump] typically calls for lower prices (or is happy to see prices fall) when WTI is above $50. Instead, President Trump has called for higher prices when they were very low (WTI under $30), often in the context of supporting American manufacturing,”
– analysts say.
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Outlook
WTI – which was trading just above $63 per barrel today – has lost 12% since the beginning of the year due to the impact of Trump’s trade tariffs, as well as OPEC’s decision to ease supply restrictions faster than expected. However, prices recovered somewhat after the US and China reduced some tariffs for 90 days, rising from the lowest closing level in four years seen earlier this month.
“The president’s implicit preference for relatively low oil prices indirectly supports our view that oil prices are likely to decline in 2025-2026,”
– analysts say, also noting the risks of exceeding expectations given the recent easing of trade tensions between Washington and Beijing.
What will happen to Russia?
It is known that Russia is critically dependent on its energy exports. First of all, on oil exports. In 2024, the federal budget revenues from oil sales amounted to 9.19 trillion rubles (approximately $89.4 billion). Total budget revenues for this period amounted to 36.71 trillion rubles. Thus, the share of oil revenues in the total structure of Russian budget revenues in 2024 was approximately 25%
This indicates that, despite international sanctions and attempts to diversify revenue sources, oil remains a key source of financing for the Russian budget.
Russian Urals oil is traditionally sold at a lower price than Brent and WTI, and it is also subject to additional factors that raw materials from other countries do not experience, namely Western sanctions. However, during all three years of the full-scale war with Ukraine, Russia has been successfully selling its oil – its main buyers today are China and India.
The federal budget of the Russian Federation for 2025 included an oil price of $70. Meanwhile, due to the collapse in the global oil market caused by Donald Trump ‘s trade war and OPEC’s decision to further increase production, the price of Russian Urals oil, according to the Ministry of Finance, was $59.77 per barrel on May 13.
So far, market analysts’ forecasts do not promise Russia any serious problems related to the price of oil, as it still has a very large backlash for sales. According to economic expert Oleg Pendzin, even a price of $50 per barrel is still acceptable for Russia.
“Currently, the direct cost of Russian oil production is about $37-38 per barrel. This is the direct cost. The critical figure for Russia is the sales price of $45,”
– the economist explained exclusively for .
So the more likely way to hurt Russia over oil is still to increase sanctions, including secondary sanctions against its buyers. The point of this step is to make it physically impossible for Russia to sell large volumes of oil and thus receive funds to continue its aggressive war of aggression.
However, back during his election campaign, after making statements about ending the war in 24 hours or 100 days, Donald Trump made a very realistic statement. He said that in order for Russia to lose the ability to fight, it would be enough to simply collapse oil prices. And he seems to be going to do that if Russia does not make concessions. Whether Trump realizes it or not, this is exactly the scenario that is happening now.
The Russian economy is already slowing down significantly at current oil prices, the industry is stagnating, and recession looks like a very realprospect.
And if Trump succeeds in getting his way and lowering the price of oil, say, to $45, the price of Russian Urals will drop to around $40. This is expected to trigger a chain reaction in the Russian economy and cause a number of structural problems that will make it extremely difficult to finance the Russian military machine.
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