Russia lost half of its oil revenues in March: details

Russia’s oil tax revenues fell sharply in March, nearly halving from a year earlier. That hit the budget hard, but within weeks the situation began to change as oil prices surged.

This is reported by Bloomberg.

Russian companies paid 494.9 billion rubles in oil taxes, 48% less than last year. Total budget revenues from oil and gas fell by 43% to 617 billion rubles.

This drop is explained by the low prices for Urals oil in February, which were taken into account in the calculations. At that time, a barrel cost less than $45, although the budget had set a price of about $59.

Prices were also pressured by sanctions and discounts demanded by buyers of Russian oil. An additional factor was the strengthening of the ruble, which meant that the budget received less revenue in the national currency.

Against this background, the Russian Federation’s budget deficit has increased, and the costs of the war against Ukraine continue to deplete financial resources.

However, the situation changed at the end of March. Urals oil prices rose sharply against the backdrop of the war in the Middle East – to over $120 per barrel for deliveries to India.

One reason was the virtual blockade of the Strait of Hormuz, a key route for oil exports from the Persian Gulf. Russian oil is not dependent on this route, so demand for it in Asia has increased.

Additionally, the market was affected by the US decision to allow certain countries, including India, to purchase Russian oil that is already at sea.

According to Bloomberg sources, amid rising prices, Moscow may abandon spending cuts and even increase defense funding if the war drags on.

At the same time, the Kremlin is urging people not to rush into spending, as high oil prices may be temporary.

It was previously reported that Russia is facing a reduction in oil production, as Ukrainian attacks on ports, pipelines, and refineries have significantly reduced the Kremlin’s export capabilities.

Recall that rising prices and easing sanctions against Russia led to an increase in the Kremlin’s revenues from oil sales.