A fall in oil prices following a decision by the OPEC+ to accelerate production has added economic pressure on Russia, which relies on the lucrative export.

The U.S. benchmark oil price traded below $60 a barrel on Monday, down from $65 in mid-April, after the cartel of oil producers—of which Saudi Arabia is the de facto leader—said it would increase oil production hikes for a second consecutive month.

Newsweek has contacted Russia’s Finance Ministry for comment.

Why It Matters

A four-year low in global oil prices adds pressure on Russia’s economy as it faces turbulence due to sanctions imposed because of Russian President Vladimir Putin‘s invasion of Ukraine.

Last month, Russia’s Economic Development Ministry reduced this year’s forecast for the average price of Russian Urals crude to $56 per barrel, the lowest since the pandemic caused a collapse in demand and well below the estimated $69 price the country’s budget is based on.

This could complicate Putin’s record spending plans for the military as he continues his aggression in Ukraine.

What To Know

Riyadh is pushing OPEC+ to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas, Reuters reported.

Despite falling prices and the prospect of weaker demand, OPEC+ said it would raise output in June by 411,000 barrels per day.

In April, oil prices dipped below $60 per barrel after OPEC+ announced a bigger-than-expected production boost for May as U.S. President Donald Trump‘s tariffs raised concerns of global economic weakness.

The price per barrel of Russia’s Urals oil has slumped by more than 20 percent since the beginning of the year, less than the $60-a-barrel tipping point, above which profits from oil exports are added to Russia’s sovereign wealth fund via taxes. Revenues below this level are covered by drawing from the fund.

David Goldman, the head of trading at Novion Global, told Newsweek that the strategy by OPEC+ appeared calibrated to apply pressure on Russia.

With oil prices sliding below $60 per barrel, Moscow is now considering tightening its budget rules by lowering its oil price benchmark from $60 to $50, he said. This is intended to manage a growing deficit projected at 1.5 percent of GDP, which is triple its original target.

Thomas O’Donnell, an energy analyst in Berlin, said last month that Urals crude prices in the $50-a barrel region would put constraints on the Russian budget.

O’Donnell said that while these prices hurt Russia’s ability to conduct the war, unless oil fell below $25 a barrel, it would not be an emergency, and even then, Moscow could still survive for a long time. This is why Trump could get Putin to the table for negotiations over the war in Ukraine by targeting Russia’s oil exports, he added.

Vladimir Milov, a former Russian energy deputy minister and a Putin critic, told the Frontelligence Insight Substack: “Oil production costs in the U.S. are significantly higher than in Russia or OPEC. This means that, if global oil prices fall below $50, large part of the U.S. oil production will be wiped off the market, and prices will quickly rebound.”

Milov said that if international oil prices remained around $60, “sanctions-driven discounts” would put Russian oil cheaper than $50, which would significantly hurt Russia but prevent the collapse of the U.S. shale oil industry, and prices would rebound further.

What People Are Saying

Energy analyst Thomas O’Donnell: “The fall in the price of oil globally clearly means the price of Russian crude has fallen quite a bit, and this will certainly have an impact on the amount of money available to the Russian government to conduct the war in Ukraine.”

What Happens Next

The New York Times reported that OPEC+ leaders, for geopolitical reasons, seemed to be making a deliberate decision to increase production even at the cost of lowering prices—punishing members that were producing more than the agreed quotas.

Trump has called for OPEC + to raise output and is scheduled to visit Saudi Arabia this month. Riyadh, according to the newspaper, also wants to strengthen its ties with the U.S. president.