Russiaʼs oil revenues grow by 50% — the Kremlin adapts to sanctions

In May, revenues to the Russian state budget from oil increased by almost 50% compared to last year. This is due to the rise in oil prices and the fact that the Kremlin is adapting to the sanctions.

Bloomberg writes about this, having made calculations based on data from the Ministry of Finance of the Russian Federation.

Last month, oil-related taxes rose to ₽632.5 billion, or $7.1 billion, while total oil and gas revenue rose 39% to ₽793.7 billion.

Earnings increased following the increase in prices for Urals oil. The Russian ministry calculated the May taxes based on the price of Urals at $74.98 a barrel versus $58.63 a year ago.

The restrictions and the $60 price ceiling on oil, introduced by the G7 ("Big Seven") countries, were intended to reduce the flow of oil dollars to Russia, which it needs to finance the war against Ukraine. However, Moscow has adapted to the sanctions, including the European Unionʼs ban on Russian oil imports, and now uses a large shadow fleet of tankers to sell its oil to Asian customers.

Russiaʼs oil revenues in May could have been higher if they had not suffered from significant subsidies to fuel producers in the country. The Russian government paid companies almost ₽202 billion for domestic deliveries of diesel and gasoline.

However, although there is an increase in revenues from oil and gas, the Kremlin proposes to reduce the overall forecast of revenues from the industry for 2024. This year, the budget of the Russian Federation is expected to receive ₽10.99 trillion from industry, compared with the previous estimate of ₽11.5 trillion.