Russia’s oil revenue slumped to a six-month low in August, reflecting lower export prices and compounding pressure on the Kremlin’s ability to finance its war in Ukraine.
Net budget proceeds from oil production totaled 326.2 billion rubles ($3.76 billion), down about 22% year-on-year and the lowest since February, according to Bloomberg calculations based on Finance Ministry data published Thursday.
Accounting for about a fifth of Russia’s budget inflows, oil and gas revenues are a key source of funds for fighting Ukraine. In recent months, Moscow benefited from a global crude rally driven by the Iran war, which also lifted Asian demand for alternatives to Persian Gulf supply. Yet attempts to end the conflict in the Middle East have lately eroded the price of Urals, Russia’s key export blend.
The country’s August budget revenues were calculated at a price of just over $59 a barrel, according to data from Russia’s tax authority. Urals’ average monthly price peaked at almost $95 a barrel in the spring.
On a month-to-month basis, Russia’s oil revenue tumbled more than 60% in August. That comes after a big jump in July, when the government typically receives a big chunk of proceeds from its profit-based tax on producers.
August revenue was also dented by large government payouts to refiners to ensure domestic fuel supplies, with subsidies climbing above 197 billion rubles, equivalent to more than $2 billion.
The country’s refineries have been struggling in recent months in the face of relentless Ukrainian drone strikes. In a move to boost domestic supplies, Moscow banned most gasoline and diesel exports and increased fuel imports. It has paid refiners almost 916 billion rubles in fuel subsidies since the start of the year, according to Bloomberg calculations based on Finance Ministry data.
The nation’s total oil and gas revenues in August dropped 16% from a year earlier to 424 billion rubles.
source: rigzone.com