For the first time since 2014: The average price of Russian oil has exceeded $100 per barrel
3 November 21:03
Tensions in the Middle East have driven Russian oil prices to multi-year highs. The average price of Urals crude used for tax calculations in October was $101.46 per barrel, according to the Russian Ministry of Economic Development. Compared to September, the main grade of Russian crude rose by $9.3, or 10%, and on a year-over-year basis, its price nearly doubled (up 89%), according to "Komersant Ukrainian", citing Russian propaganda media.
The average monthly price of Russian oil has not been this high since July 2014, according to data from the Ministry of Economic Development: at that time, it reached $105.4. Compared to the July low, when the Trump administration put the war with Iran on hold, the price of Urals soared by 152%.
Russia earned $10.6 billion from oil exports over the past four weeks, or an average of $2.66 billion per week, according to Bloomberg’s calculations. Revenue from oil exports has reached a record high for the entire duration of the war—both on a monthly and weekly basis. Compared to early September, oil revenue has increased by 68%, and compared to the start of the year—when the U.S. imposed sanctions against Rosneft and Lukoil—it has tripled.
Although oil prices significantly exceed the level budgeted ($59 per barrel), the treasury continues to fall short on oil and gas revenues. And the main reason is subsidies to oil companies, whose refineries are burning down one after another, notes economist Kirill Rodionov.
In September, the budget received 688 billion rubles in mineral extraction tax on oil, but nearly half—305 billion rubles—was returned to the oil companies as part of the “dampening mechanism.” Total subsidies for refineries, including the excise tax rebate and investment bonus, reached 419 billion rubles, a historic high, Rodionov notes. Overall, for the first nine months, total subsidies for refineries reached 2.23 trillion rubles, compared to 1.89 trillion rubles, the expert calculated.
Despite budgetary support, oil companies are finding it increasingly difficult to restore their plants, which have been targeted by drone attacks more than 114 times since the beginning of the year.
Repairing the refineries’ downstream units, where motor fuel is produced, is becoming a problem: due to sanctions, Western spare parts for them are unavailable, and Chinese and Russian equivalents take months to arrive—even though they are often incompatible with existing equipment, sources close to Rosneft previously told Bloomberg.
Attempts to protect the refineries using anti-drone nets, steel cables, and even shipping containers have proven ineffective, Bloomberg notes, citing Rosneft documents. According to these sources, the refineries’ need for repairs and equipment—and the associated costs—are piling up on the company’s balance sheet and are approaching levels that it can no longer sustain.
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