Unexpected impact: Trump’s tariff policy hits Russia’s budget, may lower gas prices in Ukraine

Contents

1. How U.S. tariffs сollapsed oil prices
2. Russian budget is directly dependent on oil prices
3. Lower oil prices will affect gasoline prices in Ukraine

How U.S. tariffs сollapsed oil prices

Oil prices have traditionally served as a barometer of global stability. Donald Trump’s decision to impose a 10% tariff on all imports into the U.S., as well as higher tariffs on countries with the largest trade deficits with the U.S., shook global stability. However, oil and gas were excluded from these tariffs.

"After a period of relative calm, global oil markets were shaken in early April by a flurry of announcements about trade tariffs. Benchmark crude oil prices fell to their lowest level in four years due to a sharp escalation in trade tensions and the prospect of increased supply from some OPEC+ countries. Brent futures dropped more than $15 per barrel to below $60, but later recovered to around $65 per barrel after some tariffs were postponed," the International Energy Agency reported.

On April 15, the White House announced that 75 countries had already contacted the administration to discuss new trade deals. As a result, individual higher tariffs have been suspended amid these discussions, except for those on China. In response to China’s actions, the U.S. is threatening a tariff of up to 245% on imports from China. However, it was later clarified that the 245% tariff would apply only to specific categories of Chinese products.

Russian budget is directly dependent on oil prices

“The tariff war initiated by U.S. President Donald Trump creates enormous uncertainty. Therefore, predicting oil prices is difficult, as they depend largely on the decisions Trump will make,” said Ilya Neskhodovsky, head of the analytical department at the National Interests Protection Network “ANTC.” “Additionally, prices are influenced by OPEC’s decisions regarding increased oil production. However, at the moment, there are no grounds for oil prices to rise.”

Moreover, oil exports are one of Russia’s main sources of revenue. The lower the global oil prices, the fewer financial resources Russia has to finance its war against Ukraine.

“Russia’s budget is based on an oil price of $70 per barrel. Their budget revenues are calculated using this price. Additionally, they planned for an exchange rate of nearly 90 rubles to the dollar, but it is much lower now, resulting in a significant loss of revenue,” said an expert.

Russia relies on the price of the so-called “Russian barrel”—Urals oil. In early April, the price of Urals crude dropped to nearly $52–$53 per barrel. However, these low prices for Russian oil led Turkey’s largest oil refinery company, Tupras, to resume its purchases of Urals oil, which had previously been suspended due to sanctions.

Lower oil prices will affect gasoline prices in Ukraine

Changes in global oil prices directly impact fuel prices in Ukraine, as the country has become fully dependent on imports since the start of the war.

“If oil prices stabilize at around $65 per barrel and remain at this level until the end of April, gasoline prices in Ukraine could drop by about 3 UAH per liter in May,” said Sergei Kuyun, director of the consulting agency “A-95.”

Currently, fuel is mainly imported to Ukraine from Romania (via ports), as well as from Poland, Germany, Lithuania, and Latvia. At least one gas station network has reported establishing gasoline supply routes from the United States to Ukraine.