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Russian oil and gas revenues are poised to slump by 35% this month from a year earlier as the price of Russia’s crude has plunged and the local currency strengthened.
Russia’s budget is expected to receive $6.63 billion (520 Russian billion rubles) from oil and gas in November, a decline of 35% compared to the same month of 2024, Reuters calculations showed on Monday.
Oil and gas revenues make up the single largest budget income item for the Russian Federation, which relies on these revenues for heavy spending on its war in Ukraine.
This month, the discount of Russia’s flagship crude grade, Urals, has widened to the highest level since May 2023 following the U.S. sanctions on Russia’s top oil producers and exporters, Rosneft and Lukoil.
Last week, the price of Urals crude loading at the Black Sea port of Novorossiysk plunged to as low as $36.61 per barrel, the lowest in nearly three years.
The price of Urals loaded at Novorossiysk and from the Baltic Sea ports in Russia has plummeted since the U.S. announced the sanctions at the end of October.
The discount of Urals relative to the international Brent benchmark widened to an average of $23.52 a barrel in the middle of November.
The widening discount of Urals will now weigh further on Russia’s oil revenues, the biggest budget income for the Kremlin to finance the war in Ukraine. October revenues for the Russian budget collapsed by 27% from a year earlier, as international oil prices dropped, sanctions on Russia intensified, and the Russian ruble strengthened.
November revenues are also significantly down compared to this time last year.
Last week, the U.S. Treasury’s Office of Foreign Assets Control said its analysis of the initial market impact of the sanctions on Rosneft and Lukoil showed they “are having their intended effect of dampening Russian revenues by lowering the price of Russian oil and therefore the country’s ability to fund its war effort against Ukraine.”
