Russia's revenue from oil and gas sales may increase by around 60% in July from May receipts to 844 billion roubles ($9.3 billion), Reuters has reported. The rise in income from oil and gas will, however, be merely a reflection of cyclical patterns. The increase will also help alleviate Moscow's budget deficit, which stood at 2.6 trillion roubles ($28.7B) in the first half of the year.
Previously, Russia's Finance Minister Anton Siluanov said that the country's budget deficit in the coming year might exceed the expected 2% of GDP as the oil price cap takes a hit on export income. This marked the first time a Russian official has acknowledged that the $60 per barrel price cap imposed on Russia by Europe and G7 nations will negatively impact its economy. Siluanov says the country will tap debt markets to bridge the deficit. Russia expects to use just over 2 trillion roubles ($29 billion) from the National Wealth Fund (NWF) in 2022 as total spending exceeds 30 trillion roubles, above the initial budget.
But later, the World Bank reported that Russia's economy will contract a mere 0.2% in the current year, way softer than last year's 2.1% dip thanks to increased buying by India and China as well as European countries that banned Russian oil imports importing huge amounts of oil commodities from the two countries and also from United Arab Emirates, Singapore and Turkey.
India in particular has dramatically ramped up purchases of Russian oil, with crude imports growing staggering 1,500% in May to over 2.15 million barrels per day in May.
Last month, a report by the Center for Research on Energy and Clean Air (CREA) titled Laundromat: How the price cap coalition whitewashes Russian oil in third countries, revealed that western countries bought $42 billion worth of laundered Russian crude in the form of various oil products from nations that are friendly towards Russia, with India leading the five other countries. For instance, India's diesel exports tripled to ~1,600,000 barrels per day in March 2023, compared to a year ago, making diesel one of the largest components of India-EU trade.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More
U.S. Power and NatGas Prices Plummet to Below Zero
Ukrainian Drones Hit Major Rosneft Refinery in Russia
First Niger Oil Bound for China Blocked in West Africa Border Row
Gas Prices Likely to Keep Falling Ahead of Peak Driving Season
Drone Attacks Take Khor Mor Gas Field Offline, Claims Lives
Comments
That is why Russia’s revenue from oil and gas sales could increase by around 60% in July from May receipts to $9.3 bn as a result of the recent rise in oil prices.
Moreover, when Russia's Finance Minister Anton Siluanov said that the country’s budget deficit in the coming year might exceed 2% of GDP, he was merely being cautious. Fortunately, the Western price cap proved an absolute failure and is now dead and buried.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert