President Vladimir Putin said that oil and gas prices in Russia are set to rise by the end of the second quarter.

Speaking at a televised government meeting, Putin said that the Russian economy was experiencing “positive trends” due to the rising price of oil. He also praised the resilience of the Russian market despite Western sanctions against Russian industries.

Russia’s federal budget saw a deficit of $29m in the first quarter of 2023 as energy revenue fell. Putin claimed that oil and gas revenue in the country has fallen by around $15.8bn (RUB1.3tn) during the first quarter.

Putin said: “It is expected that by the end of the second quarter, against the backdrop of rising oil prices, the situation will change. Additional oil and gas revenues will begin to flow into the budget”.

Western sanctions suppress Russian economy

Last month, Russian energy minister Nikolai Shulginov claimed that all oil impacted by Western sanctions has been redirected to “friendly” allied countries. India has been the primary importer of Russian oil since Putin’s invasion of Ukraine, as China becomes the secondary importer.

The Organisation of Petroleum Exporting Countries (OPEC) continues to ally with Russia. Earlier this month the group shocked the market by announcing additional production cuts of 3.66 million barrels per day to those already planned. Oil futures climbed more than 5% as a result.

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By GlobalData

The International Monetary Fund has predicted a widening budget deficit in Russia in the coming year. The group updated its Russia GDP forecast to growth of 0.7% from 0.3%, but lowered its 2024 prognosis to 1.3% from 2.1%. Labour shortages and the decline in Western investment is expected to be responsible for this decline.

Last year, Russian energy tax revenue dropped dramatically due to the imposition of sanctions from Western governments. Russia saw a 46% decline in tax revenue from energy sales over the course of 2022.