Authored by John Rubino via DollarCollapse.com,
The price of oil is rising, which is obviously good news for those who sell it to the rest of us. Russia in particular seems to be enjoying the current trend, so much so that – if I’m understanding this correctly – Moscow is now receiving more in taxes than it’s spending. This is producing something called a “budget surplus,” which is a kind of currency war weapon that can be deployed to improve a country’s geopolitical position. Here’s a quick overview:
Russia To See Oil Revenues Jump Fivefold
(Oil Price) – Due to the oil price rally, Russia expects its oil and gas revenues to jump fivefold compared to the expected revenues set in its 2018 budget, according to the Finance Ministry that now expects Russia to post a budget surplus for the first time since 2011.
Oil and gas exports account for around 40 percent of Russia’s federal budget revenues.
Russia’s revenues from oil and gas sales are now expected at US$44.4 billion (2.74 trillion Russian rubles) for 2018, up from US$8.5 billion (527.6 billion rubles), according to a budget amendment by the Finance Ministry.
Due to the unexpectedly high oil prices, Russia is currently on track to book a first budget surplus since 2011, at 0.45 percent of gross domestic product (GDP), compared to previous expectations for a 1.3 percent of GDP deficit. The previous forecasts, however, were based on assumptions that the Urals crude blend would average around $40 a barrel. Between January and April, the price of Urals has averaged $66.15.
The additional oil revenues that Russia has earned above the Urals price assumption of $40 a barrel will be allocated to reserves instead of to spending, TASS news agency reports.
Analysts commented on the proposed budget amendment that Russia will have more revenues while it continues to plan for expenditures close to the original budget law.
“This will provide a very useful cushion to lean on if there are some adverse macro or geopolitical shocks,” Ivan Tchakarov, chief economist at Citi in Moscow, told Reuters.
