• Finance Ministry sees oil at $40 a barrel next year for budget
  • 2016 budget currently based on average price of $50 a barrel

Russia may cut its oil-price estimate for the 2016 budget next year, possibly following other crude-exporting nations as the commodity, which makes up about 40 percent of the country’s budget revenue, nears 11-year lows.

“We should be ready for any oil price developments -- our estimates for next year are for about $40 a barrel for budget calculations,” Finance Minister Anton Siluanov said Wednesday in an interview with state television Rossiya 24. His ministry will prepare proposals to review fiscal plans at the end of the first quarter “if the situation doesn’t change,” he said. The 2016 budget, signed by President Vladimir Putin earlier this month, is based on an average oil price of $50 a barrel.

Russia, the world’s biggest energy exporter, is struggling to make up for the expected drop in budget revenue as U.S. and European sanctions over its role in the Ukrainian conflict restrict its access to global financial markets. Its plight resembles those of other crude exporters that have slashed their estimates for next year. Saudi Arabia, Russia’s main rival in the market, will probably use a price of about $29 a barrel in its 2016 budget, according to estimates from Riyadh-based Jadwa Investment. Kuwait will use $30 a barrel, Alrai newspaper reported Wednesday.

Brent crude, the grade used to price Russia’s main export blend, slid 1.6 percent to $37.18 a barrel at 10:41 a.m. in London. The Russian government will keep the budget deficit at no more than 3 percent of gross domestic product, after a shortfall of 2.8 percent to 2.9 percent this year, according to Siluanov.

Low energy prices have pushed Putin’s government to tap its rainy-day Reserve Fund, one of its two sovereign wealth funds, to the tune of 2.6 trillion rubles ($35.5 billion) to cover this year’s fiscal gap. Siluanov warned in September that Russia risks exhausting both it and the National Wellbeing Fund in 16 months to two years if the government doesn’t scale back spending.

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