Saudi Arabia - for Ukraine: why the military budget has decreased sharply in Russia

There was no happiness, so saudi helped: Saudi Arabia, having collected OPEC meetings on May 2, made an unprecedented decision - to significantly increase the volume of oil production, significantly exceeding even previously declared plans. This has already affected the market: the cost of Brent has dropped to $ 59 per barrel, which creates additional pressure on economies that are strongly dependent on energy, first of all - on Russia.

This is not the first time when the dynamics of the oil market influences the course of the war. In February 2014, when Russia started aggression against Ukraine, NAFTA cost more than $ 110 a barrel. During 2015, the price decreased to $ 60. It was then that Moscow was forced to agree to the Minsk agreements and formally suspend the offensive (of course, the Minsk agreements were the result of many factors, in particular, the tragedy of MH17 played the last role).

Today we are seeing a potential repetition of the story - although with significantly new circumstances. The trade war initiated by Donald Trump leads to a slowdown in global economic growth. In such circumstances, OPEC countries usually reduce production to support prices. But this time, Saudi Arabia acts differently - and it clearly does not play in favor of the Kremlin.

The fall in oil prices is also profitable: cheaper fuel at gas stations - a significant argument to the voters to which he appealed. Therefore, Washington's role should hardly be underestimated. Let me remind you that the primary approved budget of the Russian Federation for 2025 was made based on the price of oil at $ 70 per barrel. Already, these forecasts have been revised at $ 56 - a decrease by more than 25%.

Given that more than 30% of the budget of the Russian Federation is formed at the expense of oil and gas revenues, resources to finance the war are rapidly melting. The Kremlin faces more and more restrictions, and financial support for prolonged aggression against Ukraine is becoming less stable. So, if the current Riyadh strategy with the support of Washington is a long-term, the oil market may be even deeper in prices.