Russia’s energy trade is making a comeback amid soaring global oil prices
Sep 19, 2023, 11:13 AM EDT
- Russia’s oil and gas trade is on the up after more than a year of struggling in the face of sanctions.
- The nation is expected to make $7.6 billion this month from oil and gas sales, Reuters estimates.
Russia’s energy trade is on the mend after more than a year of plunging revenues, according to the latest estimates.
Russia’s oil and gas revenues are expected to rise around 733 billion rubles, or $7.6 billion through the month of September, according to an estimate from Reuters published Tuesday. That’s a 14% jump from the $6.6 billion in profits Russia raked in during the month of August, and a 7% increase from September of last year, when Russia took $7.1 billion from its oil and gas sales.
The revenue hike is partly attributable to rising oil prices, after Russia vowed to extend its pledged oil production cuts through the end of the year. That led the average price for Urals crude, Russia’s flagship oil blend, to rise to $74 a barrel in August, up from $60 a barrel last month, according to data from Russia’s Finance Ministry. Meanwhile, the nation’s total oil export revenue jumped $1.8 billion to $17.1 billion, according to International Energy Agency data.
Russia is also imposing higher taxes on its energy suppliers, another factor contributing rising profits. The nation is expected to take in an extra 24% in mineral extraction taxes over the next month, totaling $1.1 trillion roubles, Reuters’ analysis shows.
Those trends are a stark contrast to the past year, when Russia’s oil and gas revenues tanked as the west imposed strict sanctions on its energy trade. Russian crude was banned from the European Union and placed under a $60 price cap – measures that initially caused Russia’s oil and gas revenue to nearly slash in half at the start of the year.
But Putin has rebuffed those trade restrictions – and Russia has developed a number of ways to evade western oil sanctions, experts say, which has helped prop up oil export profits over several months. That includes methods like inflating the shipping costs on its oil get around the price cap, and offloading more of its crude to allies like China and India, which have gorged themselves on discounted Russian oil since the early days of the war.
Economists are still warning of trouble ahead for Russia’s overall economy, especially amid its costly “special military operation” in Ukraine. Russian central bankers just hiked interest rates to 13%, a sign that policymakers are scrambling to lower inflation and prop up the nation’s weakening ruble.
Source: Markets Insider
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