The Kremlin needs the money
Russia’s oil and gas revenues collapse
07/05/2023, 4:48 p.m
Income from oil and gas exports makes up the lion’s share of Russia’s budget. But the income falls drastically. There are several reasons for this.
Russia’s oil and gas revenues shrank noticeably in June. This is mainly due to lower prices for raw materials on the world market and the EU embargo and price cap. In addition, because of the sanctions imposed by the West, Russia has to sell its oil at significant discounts. As the Ministry of Finance announced in Moscow, revenue fell by 26 percent compared to the previous year to the equivalent of almost 5.4 billion euros.
Earlier this week, the ministry said the average price for Russia’s main crude oil, the Urals, between January and June 2023 was $52.17 per barrel (156 liters each). In the same period a year ago, a keg had cost an average of $84.09.
To put this in context: a barrel of Urals currently costs around $27 less than the North Sea Brent. Before the invasion of Ukraine, the price difference between the two varieties was less than a dollar per barrel.
Revenues from the oil and gas industry remain the Kremlin’s main source of funding. They contribute almost a third of Russia’s household income. In addition, the country depends on the revenues to finance the war of aggression against Ukraine.