Russiaʼs oil revenues fell almost half in March compared to last year. However, they may increase sharply in the near future due to a jump in oil prices amid the war in Iran.
This is reported by Bloomberg.
According to the Russian Finance Ministry, oil companies paid about $6.18 billion in taxes in March, a 48% drop from a year earlier. Total budget revenues from oil and gas also fell by 43%.
The reason was the low prices for Russian Urals oil in February. At that time, it cost an average of less than $45 per barrel — significantly lower than the budgeted $59. Sanctions and forced discounts for buyers put pressure on prices.
However, the situation is already changing. In March, oil prices rose sharply due to the conflict in the Middle East. In particular, Russian oil, which is supplied to India, was selling for more than $120 per barrel at the end of the month.
This means that Russiaʼs oil revenues could increase significantly as early as April. One factor is the war in Iran, which has effectively restricted traffic through the Strait of Hormuz.
Russian oil, which is not dependent on this route, has become more attractive to buyers in Asia. Demand has also been affected by the US decision to allow a number of countries, including India, to buy Russian oil that is already at sea.
Because of this, the Kremlin may even revise its budget plans: if spending cuts are no longer necessary, defense spending on the war against Ukraine may increase.
- In January, the FT wrote that sanctions and falling prices would cause Russiaʼs energy export revenues to fall by almost 20% in 2025 compared to the previous year.
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