The ruble’s slide against the dollar and the euro is linked by the Central Bank to softer oil prices. Yet officials emphasize that the currency remains within a familiar band, described as the range in which it has been fluctuating since late May this year.
According to the Central Bank, external conditions have weakened and oil prices have declined. This combination helps explain the currency’s modest weakening, while the ruble continues to move within the established range observed since about the end of May.
Deputy Governor Alexei Zabotkin, in an interview with RBC, noted that the ruble’s weakness will influence consumer prices. He estimated that every 10 percent shift in the exchange rate could lift inflation by roughly 0.5 to 0.6 percent, with effects potentially extending over six to twelve months. He also reminded listeners that the disinflationary pressure from a stronger ruble earlier in spring and the second half of summer has largely run its course.
On December 23, Finance Minister Anton Siluanov told reporters that renewed ruble weakness largely stems from higher imports. He argued that Russia’s oil restrictions affect market participants morally rather than materially and that the ruble’s rate remains in a constant state of fluctuation. The depreciation trend began in December and intensified mid-month. From December 12 to 16, the ruble weakened from about 62.8 to 64.65 per dollar and from 66.37 to 69.1 per euro. After December 19, the decline quickened, with the dollar hovering around 65 to 67 rubles. By December 21, the dollar traded near 70 rubles and the euro near 75. Through December 26, the rate stood around 68 rubles per dollar and 72 per euro.
Oil prices mirrored the currency movement. Brent fell from $90 to about $84, a drop of around $4 since the start of December. The Russian Urals price, after sanctions-related discounts, averaged $57.49, down from $71.1 in November, according to the Ministry of Finance. Market observers note that December tends to be a challenging month for the ruble due to stronger demand for foreign currencies ahead of the New Year. This pattern was highlighted by Dmitry Babin, a stockbroker with BCS Mir Investments, who attributed the usual December weakness to seasonal demand. [Source: market commentary, December reports.]
In a separate discussion, Vitaly Isakov, Investment Director at Otkritie Management Company, suggested that Russian oil prices could rebound as demand remains strong for decades. He pointed to the potential for a decline in oil investment and future production constraints, which could support higher prices. He also mentioned that if sales from U.S. strategic reserves halt and Chinese Covid restrictions ease, Russian oil costs could rise further. [Source: industry analysis.]
Government outlook
On December 23, Deputy Prime Minister Alexander Novak expressed expectations that European petroleum product prices would rise after the embargo on Russian oil began. He added that Russia plans to respond to the EU embargo by restricting oil and refined product shipments to buyers who do not meet price ceiling terms. With these sanctions, Russia aims to redirect supplies toward Asia-Pacific, Africa, and Latin America. [Source: government statements.]
The EU embargo on Russian oil by sea began on December 5. The G7 and Australia have refused to transport or insure Russian oil priced above $60 per barrel. A separate embargo on Russian refined products inside Europe is set for February 5. President Vladimir Putin indicated that a decree on retaliatory measures tied to price ceilings would be issued by late December. Novak also forecast a potential rise in global oil prices to the $70–$100 per barrel range in 2023, noting that sharp moves are possible. He argued that recent price volatility reflected the current supply-demand balance, with prices fluctuating between roughly $70 and $100. [Source: policy briefings and public remarks.]
Novak described the European stance as populist and warned that market interventions could distort pricing, potentially causing local shortages in some markets. He added that the discount on Russian oil had widened due to longer export routes, but expected a normalization once supply chains stabilize. By late December, Finance Minister Siluanov reiterated that budget commitments would be fulfilled despite sanctions, and that if oil dips below $70 a barrel next year, the National Wealth Fund would not be replenished from oil revenues. In such a scenario, the government could opt for additional borrowing or use NWF resources to bridge gaps. [Source: official statements and interviews.]