Falling and strengthening Russian currency are set to slash Russia’s oil and revenues by nearly 50% in December from a year earlier, to the lowest level since August 2020, according to Reuters calculations.
Revenues for the state from oil and gas are set to reach $5.15 billion (410 billion Russian rubles) this month, nearly halved from December last year, and the lowest in over five years. The last time Russia had this roughly level of oil and gas revenues, at $5.1 billion (405 billion rubles), was in August 2020, when oil prices were plunging as the pandemic crushed demand.
In November, Russia’s oil and gas revenues were estimated to have slumped by 35% from a year earlier as the price of Russia’s crude plunged and the local currency strengthened.
Oil and gas revenues make up the single largest budget income item for the Russian Federation, which relies on these revenues for heavy spending on its war in Ukraine.
Apart from lower international oil prices and a stronger ruble, the widening discount of Russia’s flagship crude grade, Urals, has also hurt Russian revenues in recent weeks, following the U.S. sanctions on Russia’s top oil producers and exporters, Rosneft and Lukoil.
The Urals discount to Brent widened to the highest level since May 2023 after the U.S. announced the sanctions at the end of October.
Russia’s total oil exports – including crude and petroleum products – fell by about 420,000 barrels per day (bpd) in November to 6.9 million bpd, as buyers assessed the implications and risks associated with the U.S. sanctions, the International Energy Agency (IEA) said in its monthly report earlier this week.
The drop in crude and fuel shipments in November combined with weaker oil prices and widening discount for Urals crude to slash Russian oil revenues to $11 billion last month, down by $3.6 billion from a year ago, the IEA has estimated.