Russia is becoming too dependent on oil revenues to support its budget as it ramps up military spending, economists said, warning that the government may have to raise taxes if prices of crude fail to meet expectations this year.
The price of Urals oil — Russia's main export — has plunged more than 20% since early December, when Western nations led by the Group of Seven imposed a $60 price cap on Russian oil exports to restrict Moscow's ability to finance its war in Ukraine.
Given that the 2023 federal budget is based on a projected Urals price of just over $70 a barrel, and prices are currently trading closer to $50, this could prove problematic.