High Oil Prices Unlikely to Rescue Russian Economic Growth Amid Fresh Sanctions
Impact of Sanctions and Oil Prices on Russian Economy
Current Economic Outlook
MOSCOW, May 4 (Reuters) - High global oil prices will not help boost Russian economic growth this year as Ukrainian drone attacks and new Western sanctions weigh on crude output and exports, a think tank close to the government said on Monday.
The influential TsMAKP think tank cut its forecast for gross domestic product growth, saying the pressures had led to a lower-than-expected output of Russia's main export commodity in 2026.
Expectations Versus Reality
Many forecasters had said Russia would be one of the main beneficiaries from the spike in oil prices following the U.S. and Israeli attacks on Iran and a blockade of the Strait of Hormuz.
"The forecast for Russian oil and petroleum product exports in 2026-2029 has been revised downward. This year, a reduction in exports from Russia is expected compared to 2025," TsMAKP analysts said in a note, without disclosing the actual figures due to confidentiality.
Risks to Oil Production and Exports
"In updating the external conditions for the baseline scenario of Russia's socio-economic development, the main considerations were the risks of reduced production and, consequently, exports of hydrocarbons from Russia due to new attacks on port infrastructure and oil refineries."
Government Response and Forecasts
They cut the GDP growth forecast for this year to between 0.5% and 0.7% from 0.9% and 1.3% only one month ago.
The government is officially forecasting growth of 1.3% but officials have said that this figure was optimistic and will be revised. New government forecasts are expected later this month.
Recent Economic Performance
Russia's economy contracted by 0.3% in the first quarter, its first quarterly contraction since early 2023. President Vladimir Putin scolded his top officials last month, asking them to come up with new ideas on how to boost growth.
Factors Affecting Oil Output
Russia was forced to reduce oil output in April due to Ukrainian drone attacks on ports and refineries, as well as a halt to crude supplies through the only remaining Russian oil pipeline to Europe, according to a Reuters report last month.
Fiscal Impact of Oil Revenues
Finance Minister Anton Siluanov said last week that the state budget had received 200 billion roubles in windfall oil revenues thanks to higher oil prices. He said that the amount made up for a shortfall in the previous two months.
(Reporting by Darya Korsunskaya; Writing by Gleb Bryanski; Editing by Andrew Heavens)
