- Russia’s oil and gas trade is booming after struggling for more than a year in the face of sanctions.
- Reuters estimates that the country is expected to earn $7.6 billion from oil and gas sales this month.
Russia’s energy trade is on the rebound after more than a year of declining revenues, according to the latest estimates.
Russia’s oil and gas revenues are expected to rise by about 733 billion rubles, or $7.6 billion, in the month through September, according to a Reuters estimate published on Tuesday. That’s 14% more than the $6.6 billion profit Russia earned in the month of August, and a 7% increase from September last year, when Russia earned $7.1 billion from its oil and gas sales.
The revenue increase is partly due to rising oil prices after Russia promised to cut oil production by the end of the year. The average price of Urals crude, Russia’s main oil blend, rose to $74 a barrel in August from $60 a barrel last month, according to Russian Finance Ministry data. Meanwhile, the country’s total oil export revenues rose by $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 to rising profits. Reuters analysis shows the country is expected to take in an additional 24% in mineral extraction taxes over the next month, totaling $1.1 trillion rubles.
These trends are in sharp contrast to last year, when Russia’s oil and gas revenues declined as the West imposed tight sanctions on its energy trade. Russian crude was banned from the EU and placed under a $60 price ceiling – measures that caused Russia’s oil and gas revenues to nearly halve at the beginning of the year.
But Putin has rejected those trade restrictions — and experts say Russia has developed a number of ways to avoid Western oil sanctions, helping boost oil export profits in several months. This includes methods such as raising shipping costs on its oil around the price limit, and offloading more of its crude to allies such as China and India, which have insisted on subsidized Russian oil since the early days of the war.
Economists are still warning of a crisis for Russia’s overall economy, especially amid its costly “special military operation” in Ukraine. Russian central bankers raised interest rates to 13%, a sign that policymakers are struggling to tame inflation and prop up the country’s weakening ruble.