Oil prices are a very important indicator for Russia’s financial health and economic authorities are closely watching the situation around lower prices which is “very tense”, a Kremlin spokesman said on Monday.

Oil plunged by 7% on Friday as China ramped up tariffs on U.S. goods, escalating a trade war that has led investors to price in a higher probability of recession. Brent BRN1! and WTI CL1! oil last week lost 10.9% and 10.6%, respectively.

Oil and natural gas sales account for a third of Russia’s federal budget revenues.

S ales fell by almost 10% in the first quarter to 2.64 trillion roubles ($30.59 billion) amid lower global oil prices and a stronger rouble.

“Of course, we are very closely monitoring the situation, which is currently characterised as extremely turbulent, tense and emotionally overloaded,” Dmitry Peskov, the Kremlin spokesman, told a daily conference call with reporters.

He linked the turbulence to U.S. President Donald Trump’s decision to impose tariffs on countries across the world.

“The situation in the global economy… is very, very tense and full of negative expectations, both in the expert community and among market players,” he said.

Adding to the downward momentum, the OPEC+ group of nations, which comprises the Organization of the Petroleum Exporting Countries and its allies including Russia, decided to advance plans for output increases.

Russia’s central bank said on Wednesday that U.S. tariff hikes may slow down the world economy, and oil prices could be lower than forecast for several years as a result of reduced global demand.

“Our economic authorities are monitoring this situation very closely and, of course, are doing and will do everything necessary to minimise the consequences of this international economic storm for our economy,” Peskov said.
Source: Reuters