Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 05 Mar 2026 by Evgeny Gavrilenkov

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The Finance Ministry plans to revise the cut-off oil price that determines operations with the National Wealth Fund. Under the current fiscal rule, if oil prices fall below $59 per barrel, the government sells CNY or gold from the NWF to offset lost energy export revenues. In December 2025 and January this year, Russian oil averaged around $40 per barrel, leading Minfin to draw about R200 billion per month from the fund. With the liquid portion of the NWF totaling R4.2 trillion as of February 1, there’s a risk it could be depleted by the end of 2027. This makes the discussion about the cut-off timely. As a lower cut-off is likely, Minfin has decided to suspend fiscal rule-related FX market interventions in March, which could weaken the ruble despite rising oil prices driven by Middle East conflict. Lowering the cut-off price could also mean more OFZ issuance. While the fiscal rule calls for spending cuts in such cases, the government will probably keep expenditures steady, leading to a larger budget deficit and increased borrowing. The CBR warned this could fuel inflation and needs careful consideration. These factors have already hit the secondary bond market, pushing 10-year yields up by 10 bps. Still, with inflation slowing, the CBR is expected to start cutting rates in March, keeping the OFZ market appealing. For the week ending March 2, inflation eased to 0.08% w-o-w, matching the prior week’s figure, down from 0.19% earlier. Inflationary pressure is waning as economic growth reportedly turned negative in January, with several indicators showing no clear improvement. We think the key rate cut is likely.