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Oil is everything.

The reduction in oil revenue took place for all oil producers. The numbers quoted are essentially identical to the magnitude of price decline. There’s no particular reason to look for any other cause.

Perhaps the most significant event from the tariff-induced market moves of last week is what happened to the price of oil. It is sharply down, and everyone should very seriously think about and realize the president Trump’s goal of strong oil production increases in the United States cannot take place at this reduced price of oil.

Wells will not be drilled if the proceeds cannot pay the price of that well being drilled, especially when interest rates are not 0% as they were when shale got underway. Everyone always knew there was oil in that shale rock and the impetus for making all of that happen over the past 10-15 years was near 0% interest rates on the loan to do the drilling. Higher interest rates have started the talk coming out of the Permian of its peak.

As for the Russian budget, it’s probably most important to understand that their sovereign wealth fund or national wealth fund as they call it is $137 billion dollars. Their deficit for 2024 appears to have been 17 billion dollars. The national wealth fund is available to fund budgetary shortfalls. This means they do not require their Central Bank to fund the deficit via a Quantitative Ease equivalent.

So a decline of oil price by 17% can be erased for about 10 years from via the national or sovereign wealth fund.

And for one additional interesting little tidbit. The national wealth fund has a substantial position in gold. Gold has been sharply increasing in price. Also, the investment manager of the sovereign wealth fund was who Putin sent to Washington just this past week to discuss subjects not revealed.