Russia’s revenues from oil and gas are projected to decline significantly in September 2023, with estimates indicating a drop of 23% compared to the same month last year. This decrease is attributed to falling international crude prices and a strengthening of the Russian ruble, according to calculations provided by Reuters.
This revenue slump presents challenges for Russia as it prepares its budget for 2026 and continues its extensive financial commitments related to the ongoing conflict in Ukraine. Revenue from oil and gas sales is expected to reach $7.11 billion (approximately 592 billion rubles) this month. This figure, while lower year-on-year, represents a 17% increase from August 2023 due to reduced government subsidies to refiners.
The overall trend for the year is concerning, as revenues from January to September 2023 are forecasted to fall by 20.5%, totaling $79.6 billion (about 6.62 trillion rubles). The combination of a stronger ruble and decreasing international oil prices has led to discounted Russian crude, pushing revenues to their lowest levels in two years.
Impact of International Pressures
In August, Russia’s crude and petroleum product export revenue declined by $920 million compared to July, totaling $13.51 billion, according to the International Energy Agency (IEA). The widening discounts on Russian crude grades were influenced by U.S. pressure on countries like India to limit oil purchases from Russia. Furthermore, Russian refinery production suffered setbacks as Ukrainian forces targeted several processing facilities with drone strikes.
Despite these challenges, Russia’s shipments of petroleum products saw an increase of 8.9% in August compared to July, largely due to the resumption of operations at some refineries following maintenance. Reports indicate that oil product exports from the Baltic Sea and Black Sea ports increased, contrasting with a decline in shipments from Arctic ports.
The situation underscores the complex dynamics of Russia’s oil and gas sector as it navigates international sanctions, fluctuating market conditions, and the ongoing conflict in Ukraine. With revenues under pressure, the Russian government faces difficult decisions regarding economic strategy and military expenditures in the months ahead.
