Russian oil prices fall to pre-war levels in Middle East

In the first days of July, the average price of Urals in Russia’s western ports was $41.66 per barrel — significantly below the budgeted $59.

The price of Russia’s flagship oil, Urals, has fallen to the level it was at before the Middle East conflict escalated. This is putting pressure on the Kremlin’s state budget, Bloomberg reports.

For example, in the first three days of July, the average price of Urals in Russia’s western ports was $41.66 per barrel — more than half the price at the peak of the oil crisis in April. These are the figures that the Russian Finance Ministry uses to calculate tax revenues.

Until recently, Russia was one of the main beneficiaries of the crisis. Disruptions to shipping through the Strait of Hormuz, along with the easing of US sanctions, have driven up prices and demand for Russian oil.

Since March, Urals has exceeded the budgeted $59 per barrel every month, reaching $60.92 in June, when shipping through the strait increased after an interim agreement between Washington and Tehran.

These surpluses have allowed Russia, which finances about a fifth of its budget from oil and gas, to resume replenishing its reserve fund for the first time in almost a year and postpone spending cuts.

Now the trend is reversing. In the first five months of 2026, Russia’s budget deficit reached 6 trillion rubles ($77 billion), or 2.6% of GDP — about 60% more than planned for the entire year. Since oil taxes are calculated with a delay, the July price drop will be reflected in the budget as early as August.

The $41.66 price does not include transportation costs. The discount of Russian oil to the Dated Brent benchmark has increased to $27.35 per barrel, and after delivery to India it is reduced to $8.55.

Meanwhile, as of early July, 42.74% of the total design capacity of the Russian oil refining industry has been disabled as a result of strikes by the Ukrainian Defense Forces.