Russian Oil and Gas Revenues Surge Despite Sanctions

Despite facing Western sanctions, Russian Oil and Gas Revenues surged by over 80% in February compared to the previous year, exceeding $10 billion.

This significant increase was driven by rising prices for Russian oil, defying expectations amidst international sanctions.

According to reports from Bloomberg, revenues to the Russian budget from taxes on oil and gas amounted to 945.6 billion rubles ($10.4 billion) last month, as announced by the Russian Ministry of Finance on Tuesday.

Taxes on oil and petroleum products, which constitute 84% of all hydrocarbon revenues, doubled according to Bloomberg’s calculations based on this data.

The oil and gas sectors are pivotal sources of revenue for the Russian state treasury, which faces pressure from increasing military expenditures associated with Russia’s invasion of Ukraine.

In efforts to curtail Russia’s oil revenue, Western countries imposed sanctions, causing the price of Urals oil to fall below $50 per barrel in February 2023.

The European Union banned most maritime imports of oil and petroleum products from Russia, while G7 countries imposed a price cap of $60 per barrel for Russian oil cargoes.

Although buyers from other countries can purchase Russian barrels at a higher price, tankers are prohibited from utilizing Western services such as insurance and delivery for these shipments.

Moscow mitigated the impact of price restrictions by leveraging a vast shadow fleet of tankers and collaborating with non-Western buyers, intermediaries, and service providers.

However, since November, the US and its allies intensified monitoring of compliance with price limits, imposing sanctions on several vessels and traders for violating restrictions.

To “safeguard” budgetary cash flows, Russia activated the so-called “price floor mechanism,” obliging producers to pay taxes based on an artificial discount of $15 per barrel from Urals to Brent.

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Read also – Sokol: India Resumes Russian Oil Imports After 2-Month Suspension

India has resumed imports of Russian Sokol oil following a two-month hiatus, as reported by multiple trade sources and ship tracking data.

The resumption of imports comes after Indian state refiners halted purchases of Sokol oil last year due to government advisories against using Chinese yuan for payments, amid strained relations between India and China.

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