Russia could get an additional $65 billion for its state coffers this year if higher oil prices remain resilient, Bloomberg reported this week, citing estimates made by economists.
For the windfall to realize, prices need to remain around $90 per barrel of Brent for the rest of the year, according to the estimates. Yet with many forecasters expecting even higher prices later in the year, topping $100 and more, Russia may gain a lot more, up to $73 billion in additional oil revenues.
With gas prices high, too, Russian fossil fuel revenues are set to go even higher in total.
"Russia's fiscal position is so super-stable that even with more modest oil prices, it's hard to compromise it in the current situation," Bloomberg quoted Renaissance Capital analyst Donets as saying.
"This year's energy windfall looks set to be staggeringly large. That's swelling Russia's fiscal reserves at just the right time for the Kremlin, providing a bigger buffer against crisis in the event of sanctions. Geopolitics aside, it also means more flexibility to boost spending and invest in the economy," Bloomberg economist Scott Johnson told the news agency.
Forecasts about oil reaching and topping $100 this year have been multiplying recently as bullish factors strengthen, led by continued strong demand coupled with the relaxation of Covid-related restrictions. Tight supply remains in the spotlight as well, despite recent forecasts about a strong rebound in U.S. oil production this year.
It seems everyone is watching OPEC rather than the U.S. right now, with the cartel's capacity being cited by most analysts as a big reason for their bullish forecasts.
There are also geopolitical factors: on the tailwind side, there is the situation around Ukraine that, in case of escalation, could push oil prices significantly higher, and on the headwind side, there are the Iranian-U.S. nuclear talks that just might end with a deal this time. A deal would mean more Iranian barrels coming into international markets legally, but, according to analysts, this has already been factored into prices.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More