Russia's oil revenues in January higher than from before the war

Russia's oil revenues in January higher than from before the war
Russia's budget earned more from oil export taxes in January this year than it did from before the war. / bne IntelliNews
By bne IntelliNews February 8, 2024

Russia’s budget earned more money from oil taxes in January 2024 than it did in January 2022 before the Ukraine war started, the Ministry of Finance (MinFin) reported on February 7.

Russia’s monthly revenues from oil exports a year after the G7 imposed twin sanctions on December 5 and February 5 have completely recovered and created a market worth $11bn a year for grey shipping companies.

“These petrodollars evaporate on the way from the sender in Russia to the recipients,” Bloomberg reported.

Oil revenues collapsed between December 2022 and February 2023 as Russia reorientated its oil exports from the short Baltic route to Rotterdam, the main EU oil terminal for Russian oil, redirecting its tankers to new customers in Asia – a roundtrip journey that takes around four months.

As bne IntelliNews reported, MinFin reported a RUB308bn ($3.4bn) deficit in January, which is unusual but not as bad as the RUB1.7 trillion deficit it reported a year earlier. However, at the time Russian Finance Minister Anton Siluanov stuck to his 2% of GDP budget deficit prediction for the full year and said that oil revenues would recover in the second half of 2023. Both predictions came true and Russia ended 2023 with a 1.9% of GDP deficit as well as growing by 3.4% y/y.

Oil production has also held up well in 2023. Following the start of the war a controversial report by Yale predicted that Russia’s oil production would fall from circa 10mbpd to 6.5mbpd, whereas it has been running fairly consistently at 9.5mbpd for all of 2023. And that includes a voluntary 500,000 barrels a day cut imposed by the Kremlin as part of a production cut deal worked out by the members of the OPEC+ cartel to support prices.

The Kremlin’s shadow fleet has been central to its success at remaking its oil distribution system so quickly and currently carries an estimated 45% of all Russian oil and petroleum products. Together with the official Russian fleet Moscow can handle 70% of all its exports with vessels under its direct control, by passing the $60 per barrel price cap. Its partners in Asia are happy to pay slightly discounted rates for Russian oil; for India for example pays an average of $72, The Bell reports. Another fifth of all shipments, and a third of Urals oil exports, are carried by Greek tankers.