Russia’s oil proceeds to the state budget increased by almost a third last year to the highest since at least 2018, spurred by higher crude prices as the nation adapted to international sanctions.
Oil-related taxes rose to 9.19 trillion rubles ($89.4 billion) 2024, up from 7.04 trillion rubles a year ago, according to Bloomberg calculations based on finance ministry’s data published Monday. Those proceeds from crude and refined products accounted for 83% of Russia’s total oil and gas revenue, which reached 11.13 trillion rubles last year.
The oil-revenue spike reflects higher prices for Urals crude, Russia’s key export blend, and its discount to global Brent benchmark narrowed, even amid a price cap imposed by the Group of Seven nations in response to Kremlin’s invasion of Ukraine. Moscow has adapted to restrictions, including a European Union ban on Russian oil imports, by using a massive shadow fleet of tankers and re-directing its oil sales to Asian clients.
As Joe Biden leaves office, his administration imposed its most aggressive sanctions on Russia’s oil industry — key to financing the Kremlin’s aggression against Ukraine. Sweeping sanctions announced last week target two large oil producers, vital insurers and traders linked to hundreds of cargoes and about 160 oil tankers.
The average price of Urals used for tax calculations was $67.6 a barrel last year, almost 10% above the average level in 2023. That’s the year when the nation’s oil industry faced the full impact of the G-7 price threshold that limited access to Western shipping and insurance and pushed Urals below $50 a barrel in the first months of the year.
At the same time, Russian ruble’s exchange rate averaged some 91.37 per US dollar in 2024, a 10% depreciation from the previous year, contributing to higher budget revenues in local currency.
The Russian budget’s oil proceeds would have been higher last year if they hadn’t been dented by big state subsidies to the nation’s refiners. The government paid 1.82 trillion rubles to fuel producers for domestic supplies of diesel and gasoline, according to the Finance Ministry. The payments partially compensate refiners for the difference in car fuel prices in Russia and abroad.
Source: by Bloomberg News