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Russia’s Oil And Gas Revenues Slump 46% Year-Over-Year

Russia’s budget revenues from oil and gas plunged in January by 46% compared to the same month last year due to the sanctions on Russian oil exports, which led to a slump in the price of Russia’s flagship crude grade.

Russian budget revenues from energy sales – including taxes and customs revenues – plummeted last month to the lowest level since August 2020, according to data from its finance ministry compiled by Reuters.

In January 2023, the price of Russia’s flagship Urals grade averaged 42% lower than in the same month of 2022, as its discount to Brent Crude grew wider following the EU embargo and the G7 price cap, which came into effect on December 5. The average price of Urals in January, at $49.48 per barrel, was 1.7 times lower than in January 2022, when it averaged $85.64 per barrel, Russia’s Finance Ministry said earlier this week. 

Russia calculates the export duty due to the budget based on the price of Urals. This has been reducing its revenues due to the wide discount of Urals to Brent, which has swelled to nearly $40 per barrel at times.

Brent Crude was trading at around $82 a barrel early on Friday, while Urals, per Reuters estimates, was at around $53.60 per barrel. 

Russia is considering taxing its oil firms based on the price of Brent – instead of Urals – to limit the fallout on the Russian budget revenues due to the widening discount of Urals to Brent, Russian daily Kommersant reported on Friday, quoting sources.  

Russia is looking at ways to reduce the steep discount on Urals and to stabilize its oil revenues. At the end of January, Russian President Vladimir Putin ordered the government to submit within a month proposals to change the methodology for calculating the taxes from oil, Kommersant’s sources said.

The EU oil ban and price cap are costing Russia an estimated $174 million (160 million euros) per day due to the fall in shipment volumes and prices for Russian oil, Finland-based Centre for Research on Energy and Clean Air (CREA) said in a report last month. The revenue losses are expected to rise to $304 million (280 million euros) per day with additional measures that are being implemented as of February 5, according to CREA.

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By Michael Kern for Oilprice.com

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  • George Doolittle on February 03 2023 said:
    Brutal day for all commodity markets today as the price for used Teslas suddenly collapse to zero. Good luck being long lumber futures going into Springtime at the moment as well.

    Long US Treasuries strong buy. Massive deflation upon the USA continues to rage away.
  • Mamdouh Salameh on February 03 2023 said:
    Where is the proof? Data compiled by Reuters and attributed to the Russian Finance Ministry isn’t a proof because it could be a deliberate Western disinformation.

    The proof that it is wrong is that the Russian Central Bank published official data showing the surpluses in Russian current account and trade balance in 2022 amounted to $228 bn and $290 bn respectively. Such surpluses don’t grow on trees. They are the result of real exports including 7.8 million barrels a day (mbd) of Russian crude oil and petroleum products exported on average in 2022 or 98% of the pre-Ukraine level of 8.0 mbd despite the sanctions, the bans and the oil price cap or (should I call it the price crap).

    And since nobody except Russia is privy to what discount it offers its loyal customers on the Urals crude, any claims about a Russian budget plunge in January by 46% compared to the same month last year are unsubstantiated if not plain Western disinformation. Moreover, the bulk of Russian crude oil exports is made of the ESPO crude with Urals crude accounting for an estimated 24% of the total.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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