Trump follows through on his threat to Russia – oil prices fall for the second week in a row
11 April 10:17
Oil prices remained almost unchanged on Friday, but overall they have been falling for the second week in a row due to fears that the protracted trade war between the United States and China will lead to a reduction in economic growth and lower oil consumption. This is reported by Komersant ukrainskyi with reference to Reuters.
Futures for Brent crude oil rose 14 cents (0.2%) to $63.47 per barrel as of 7:22 a.m. Kyiv time, while futures for West Texas Intermediate (WTI) also rose 0.2% to $60.21, after both benchmarks fell by more than $2 on Thursday.
It is expected that Brent will fall by 3.2% and WTI by 2.9% this week. Last week, both benchmarks fell by 11%.
Less trade – less demand for oil – lower prices
The prolonged conflict between the world’s two largest economies is likely to reduce global trade and disrupt trade routes, ultimately negatively impacting global economic growth.
“We expect prices to remain under pressure as investors assess the ongoing trade negotiations and growing tensions between Washington and Beijing,”
– BMI analysts said in a Friday research note.
Daniel Hynes, senior commodities strategist at ANZ, emphasized in his commentary that fears of a global economic slowdown are also putting pressure on oil prices.
The bank predicts a 1% decline in oil consumption if global economic growth falls below 3%, Hines said.
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The situation in the US and OPEC
US President Donald Trump raised tariffs against China to 145% on Thursday, even after announcing earlier this week that he would suspend high duties on dozens of trading partners. China, in turn, announced additional import duties on American goods.
The U.S. Energy Information Administration (EIA) on Thursday lowered its forecasts for global economic growth and warned that tariffs could have a significant impact on oil prices, cutting its forecasts for oil demand in the U.S. and the world for this year and next.
BMI analysts noted that the OPEC meeting on May 5 could be crucial, signaling a willingness to intervene to maintain market stability.
“The announcement of additional supply growth at the next meeting is likely to trigger a new sell-off,”
– analysts emphasized.
Russia is already hurting
It is well known that Russia is critically dependent on its energy exports. First of all, on oil exports. In 2024, the Russian federal budget revenues from oil sales amounted to 9.19 trillion rubles (approximately $89.4 billion). Total budget revenues for this period amounted to 36.71 trillion rubles. Thus, the share of oil revenues in the total structure of Russian budget revenues in 2024 was approximately 25%
This indicates that, despite international sanctions and attempts to diversify revenue sources, oil remains a key source of financing for the Russian budget.
Russian Urals oil is traditionally sold at a lower price than Brent and WTI, and it is also subject to additional factors that raw materials from other countries do not experience, namely Western sanctions. However, during all three years of the full-scale war with Ukraine, Russia has been successfully selling its oil – its main buyers today are China and India.
The federal budget of the Russian Federation for 2025 included an oil price of 70%. Meanwhile, due to the collapse in the global oil market caused by Donald Trump ‘s trade war and OPEC’s decision to further increase production, the price of Russian Urals oil has already dropped to $52 per barrel.
So far, market analysts’ forecasts do not promise Russia any serious problems related to the price of oil, as it still has a very large backlash for sales. According to economic expert Oleg Pendzin, even a price of $50 per barrel is still acceptable for Russia.
“Currently, the direct cost of Russian oil production is about $37-38 per barrel. This is the direct cost. The critical figure for Russia is the sales price of $45,”
– the economist explained exclusively for .
Therefore, the most likely way to hurt Russia over oil is still to increase sanctions, including secondary sanctions against its buyers. The point of this step is to make it physically impossible for Russia to sell large volumes of oil and thus receive funds to continue its aggressive war of aggression.
However, back during his election campaign, after making statements about ending the war in 24 hours or 100 days, Donald Trump made a very realistic statement. He said that in order for Russia to lose the ability to fight, it would be enough to simply collapse oil prices. And he seems to be going to do that if Russia does not make concessions. Whether Trump realizes it or not, this is exactly what is happening now.
The Russian economy is already slowing down significantly at a price of $52 per barrel of oil, its industry is stagnating, and recession looks like a very real prospect.
And if the current downward trend in prices continues, then the $45 figure no longer looks fantastic.
