Successfully Bypassing Western Embargo, Russia’s Oil Revenue Soars

JAKARTA – Russia’s revenue from oil exports jumped almost 50% last month from a year ago, boosted by higher prices for the country’s mainstay Urals oil. The increase was also due to the successful adaptation of Russian oil producers to Western sanctions.

Moscow’s revenue from crude oil sales increased with oil-related taxes rising to 590.6 billion rubles or about $6.7 billion (around Rp107.2 trillion at an exchange rate of Rp16,000 per USD) last month compared to 402.8 billion rubles (USD4.5 billion) in June 2023, Bloomberg reported based on data from the Russian Finance Ministry, quoted by Russia Today, Thursday (4/7/2024).

The data also showed that total oil and gas profits grew by 41% to 746.6 billion rubles, or about $8.4 billion. The news outlet attributed the surge to higher prices for Russia’s main export blend, Urals. The ministry calculated June’s tax based on Urals prices of $67.37 per barrel, up from $53.50 last year.

Urals’ discount to the global Brent benchmark has been declining, despite a $60-a-barrel price cap on Russian oil imposed by the G7 and the European Union (EU). Western governments have imposed the price cap alongside an embargo on Russian seaborne oil in an attempt to weaken the country’s economy while keeping Russian crude flowing to global markets.

The sanctions were imposed in December 2022 and followed in February 2023 by similar restrictions on Russian oil exports. In response, Russia has shifted much of its energy exports to Asia — particularly to India and China, where its oil has been sold well above Western price limits.

EU officials have repeatedly acknowledged that Moscow has managed to circumvent the limits, as “virtually no” crude shipments are sold at or below the price cap, dealing a blow to Western efforts to limit Russia’s energy revenues.

Last month, Finance Ministry data showed that Russia’s budget revenues from oil and gas had jumped by 73.5% between January and May this year, compared with the first five months of 2023. Oil and gas sales revenues reached 4.95 trillion rubles, or about $55.7 billion, in the first five months of this year.

Russia expects oil and gas revenues to reach 10.99 trillion rubles or about $125 billion (around Rp. 2,000 trillion) this year, according to Finance Ministry data.

(fjo)