Russian oil revenues continue to grow: 50% in May
5 June 2024 18:15
Russia’s oil revenues in May 2023 increased by almost 50% year-on-year as Russian oil prices rose and the country adapted to international sanctions. This is stated in an article by Bloomberg, reports "Komersant Ukrainian"
Tax revenues from the oil industry in Russia reached 632.5 billion rubles ($7.1 billion ) last month, the newspaper reports, citing data from the Russian Ministry of Finance. This is almost half as much as in May 2023, when Russia earned 425.8 billion rubles from oil.
Overall, oil and gas revenues increased by 39% to RUB 793.7 billion.
The increase in revenues is due to higher prices for Russia’s export oil blend Ural. In May, the Russian Ministry of Finance calculated taxes based on the Urals price of $74.98 per barrel, up from $58.63 a year earlier. The Urals discount to global Brent has decreased despite the price cap imposed by the G7 countries.
The G7 restrictions are aimed at reducing the flow of petrodollars that finance the Kremlin’s war against Ukraine by restricting access to Western shipping and insurance services. However, Moscow has adapted to the sanctions, in particular the EU embargo on Russian oil, by using a huge “shadow” tanker fleet and selling oil to Asian buyers.
At the same time, oil and gas revenues to the Russian budget actually fell by more than 35% month-on-month in May, Bloomberg calculated. This is due to the fact that one of the key oil taxes, the income tax, is paid only four times a year.
Russia’s oil revenues could be higher if it were not for huge subsidies for local fuel producers. The government has paid companies almost 202 billion rubles to compensate for the difference between diesel and petrol prices in Russia and abroad.
Despite the growth in annual oil and gas revenues, Moscow has lowered its forecast for 2024. The Russian budget now expects to receive 10.99 trillion rubles instead of the previously expected 11.5 trillion rubles, according to draft amendments to the state budget.
The revised forecast takes into account lower export prices for Russian oil and gas this year compared to the peaks of 2022. Oil is now expected to reach $65 per barrel, down from $71.3. The gas price has been cut to $252.8 per thousand cubic metres.
Global oil prices, which are traditionally higher than Russian prices, are now at a 4-month low due to low demand growth and reduced geopolitical risk.
