Russia's economy on the brink as Trump tariffs send oil prices tumbling to three-year low

Russia’s economy is on the ropes after global oil prices plunged to a 21-month low — with experts warning the drop, triggered by the prospect of Donald Trump’s sweeping new tariffs, could leave the Kremlin dangerously short of cash. According to Argus Media, the price of Russian Urals crude at the Baltic port of Primorsk fell to just $51.54 per barrel on April 7 — far below the $70 benchmark used by Moscow to balance its 2025 Budget.

Wojciech Jakobik, a Warsaw-based energy analyst, said the impact could be severe. He told the Kyiv Independent: “If the average price is lower throughout the year, Russia will have less money to earn and spend, especially to cover growing expenses connected to illegal actions against Ukraine. Russia’s National Wealth Fund would be depleted faster, and Russia would need a truce quicker.”

The White House’s protectionist move — which Mr Trump has dubbed “Liberation Day” — saw 34% tariffs slapped on Chinese goods, followed by an additional 50% announced days later.

The EU was hit with 20% tariffs, prompting Brussels' threats of retaliation and fuelling fears of a global trade war.

However, on April 9, 2025, President Trump announced a 90-day pause on tariff increases for most countries, maintaining a 10% tariff during this period.

China, described by Mr Trump as the “worst offender,” was excluded from this reprieve, with tariffs on its goods escalating to 125%.

Mr Trump did not directly target Russia, but his actions sent markets reeling.

The Kremlin’s reliance on energy exports, which account for around 30% of the state budget, means it is now being squeezed by events beyond its control.

Russian President Vladimir Putin has dramatically ramped up defence spending, with 32% of this year’s budget allocated to the war effort in Ukraine. But the falling oil price risks undermining that strategy.

Kremlin spokesman Dmitry Peskov admitted officials were closely monitoring what he described as an “extremely turbulent, tense” situation.

He told Interfax: “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.”

The tariffs come on top of mounting pressure elsewhere. American and British sanctions imposed in January slashed shadow fleet oil shipments by 21% in February, according to the Centre for Research on Energy and Clean Air (CREA).

Meanwhile, OPEC+ — of which Russia is a member — has ramped up production more quickly than expected, with output set to rise by 411,000 barrels per day next month. More oil on the market means lower prices.

John Gawthrop, editor at Argus Eurasia Energy, said the combination of surging supply and geopolitical uncertainty had created “the perfect storm”. He warned: “If you take out a big chunk of revenue that had been expected, it becomes harder to maintain that already precarious balance.”

Goldman Sachs now forecasts Brent crude will drop to $62 per barrel by December — and as low as $40 in a worst-case scenario. Mr Jakobik said further falls could leave Moscow with no choice but to seek a truce in Ukraine.