The declining price of oil (Urals was at USD 93.8/bbl in June vs. USD 108.3/bbl in May) resulted in a serious decline in the value of exports, to USD 40.8 bn (from USD 45.2 bn in May). The June reading was the lowest since February 2010. As two thirds of Russian exports are accounted for by oil, oil products and gas, any volatility in oil prices results in the export value fluctuating by a comparable magnitude.
As a result, the trade balance dropped from USD 17.4bn in May to USD 14.0bn in June, the lowest reading since November 2010. Preliminary data for July showed import growth accelerating, which is likely to result in the trade balance weakening further in July, despite oil prices starting to rebound. With Urals averaging above USD 110/bbl for the year, Russia’s trade and current balances would remain above the zero mark in 2012. However, when and if oil prices decline towards USD 100/bbl, Russia’s external balances could once again come under pressure, with RUB following suit.