The agreement between the United States and Iran has triggered a sharp decline in Russian oil prices after reopening the Strait of Hormuz and allowing tankers carrying large volumes of Middle Eastern crude to return to the global market.

According to Yegor Susin, Managing Director of Gazprombank Private, the price of Russia’s Urals crude has dropped to around $50 per barrel based on Dated Brent pricing, the benchmark used for approximately 80% of global oil trade, The Caspian Post reports.

He noted that Dated Brent fell to $72 per barrel on Thursday, while the discount on Urals crude widened to about $22 per barrel.

Since reaching a peak in April, when Russia’s flagship export grade was sold through western ports at $116 per barrel, the price of Urals crude has fallen by more than half. The decline has pushed oil prices once again below the level assumed in Russia’s budget calculations, which were based on an estimated oil price of $59 per barrel.

Susin estimates that the average price of Urals crude for June-the figure used to calculate oil and gas tax revenues for the federal budget-will be approximately $63 per barrel. That would represent a 27% decline from May’s average price of $86.52 per barrel and a 33% drop from April’s average of $94.87 per barrel, the highest monthly level recorded since 2014.

Global oil prices have now returned to levels seen before the conflict involving Iran. Brent crude fell to $72 per barrel on Thursday, prompting concerns about Russia’s fiscal outlook. According to Andrey Zatsepin, an analyst at Alor Broker, the decline suggests that pressure on the Russian budget is likely to intensify in August and September.

In May, higher oil prices boosted the government’s oil and gas revenues by 70% compared with January and February and by 38% year-on-year. Nevertheless, Russia’s budget deficit for the first five months of the year reached a record 6 trillion rubles, exceeding the full-year target by 1.6 times.

Zatsepin argues that the government may be forced to expand the money supply to finance the deficit. He also says that after the State Duma elections in September, authorities could consider unpopular fiscal measures, including the introduction of a tax on so-called excess profits.

Analysts at Vector Capital note that one of the key indicators for Russia’s budget-the ruble-denominated price of oil-has also fallen back to pre-conflict levels. However, they point out that record-high crude exports are providing some support. Following strikes on refineries, Russian oil companies have been left with significant volumes of unprocessed crude and are exporting oil at near-maximum port capacity.

According to Reuters data cited by the analysts, planned crude shipments through Baltic Sea ports in June reached 2.8 million barrels per day, around 1 million barrels per day higher than originally projected.

Even so, Vector Capital analysts question how much of the exported crude is ultimately being sold abroad rather than refined elsewhere and later re-entering Russia in the form of imported gasoline.

Under the 2026 budget law, Russia’s Finance Ministry initially forecast oil and gas revenues of 8.8 trillion rubles. However, revenue from the sector declined by 30% year-on-year during the first five months of the year. The Accounts Chamber now estimates that the budget could lose about 1 trillion rubles in resource-related income over the course of the year and forecasts total oil and gas revenues of approximately 7.8 trillion rubles.