Russia’s federal budget saw a significant increase in revenue from oil and gas sales during the first half of 2024, rising by around 41% year-on-year to reach 5.698 trillion roubles ($65.12 billion). This surge in revenue was driven by a combination of rising oil prices and the weakening of the Russian ruble.
Oil and gas revenues have long been a crucial source of cash for the Kremlin, accounting for around a third to a half of total federal budget proceedings over the past decade. However, the ongoing military conflict in Ukraine has prompted the West to impose multiple sanctions aimed at curbing this crucial revenue stream for Russia.
Despite these sanctions, the data from the Russian finance ministry showed that the price of the country’s flagship oil blend, Urals, averaged $69.1 per barrel during the first half of the year, surpassing the Western-imposed price cap of $60. This, coupled with the weakening of the ruble to an average of 90.8 per $1, contributed to the significant increase in oil and gas revenue.
The data also revealed that payments to refineries under the “damping mechanism” – a mechanism introduced to stop companies from capitalizing on high fuel export prices and defend the domestic market – reached 158.1 billion roubles in June, down from 201.7 billion roubles in May and 78.6 billion roubles in June 2023.
While the Russian government has touted the country’s high rates of economic growth, outpacing that of Western economies, economists have highlighted the poor quality of this growth, noting that the production of missiles and shells may contribute to higher GDP but offer limited benefit to the population.