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Following the weekend’s surprise OPEC+ 1.6 million bpd output cut, the price of Urals, Russia’s flagship crude oil, has reached beyond the $60 per barrel price cap level set by the G7 in December, Reuters reports, citing sources involved in Russian oil trading.
Based on the G7 price cap, Urals can only be traded in US dollars if sold below $60 per barrel. Oil traders told Reuters that because there is a period of time during which cargoes are priced, it is still possible to close below $60, depending on deal timing.
Also on Wednesday, the Kremlin noted a 43% year-on-year drop in federal budget revenues from oil and gas in March, Reuters reports, citing the Russian Finance Ministry.
There was no drop in oil and gas revenues for the federal budget month-on-month (from February to March) due to the collection of quarterly mineral extraction profit taxes on the industry, which made up for losses.
Russia recorded federal budget revenues from oil and gas sales at nearly $8.7 billion in March, up slightly from February, but down significantly from March last year, when oil and gas sales revenue for the federal budget topped $1.2 trillion.
The Kremlin relies on oil and gas revenues to finance its “special operation” in Ukraine.
In mid-March, the International Energy Agency (IEA) cited the Russian Finance Ministry as saying that oil sales were 45% lower than the same time last year, noting that Western sanctions were having the “intended effect”.
The Kremlin is eyeing a 2% GDP budget deficit for this year, with the Finance Ministry predicting a 23% drop in oil and gas revenues for the full year. The Ministry’s price for February crude was $49.56, with March set at $47.85. This is down from March 2022, when Urals crude prices were set at $88.95, according to Reuters.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com