According to Reuters calculations, Russia’s oil and gas revenue in July is set to rise by 50% year-on-year to almost $14 billion. This is due to stronger oil prices and a weaker rouble.
Oil and gas revenue has been the most important source of cash for the Kremlin, accounting for about a third to a half of total federal budget proceeds over the past decade. Preliminary estimates project Russia’s July oil and gas revenue at 1.22 trillion roubles ($13.93 billion), up from 747 billion roubles in June and 811 billion roubles in July 2023.
Proceeds for the January to July period are projected to rise by 65% year-on-year to 6.9 trillion roubles. July’s payments will also benefit from Russia’s profit-based tax, typically paid once a quarter, reaping about 500 billion roubles, according to Reuters calculations.
The higher revenue is due to a rise in the average price of Russia’s Urals oil grade to 6,405 roubles ($73.12) a metric ton in the second quarter, up from 6,139 roubles in the previous quarter. The budget is also set to benefit from lower subsidies to refineries under the so-called damper mechanism and excise tax.
For 2024 as a whole, the government budgeted for federal revenue of 10.7 trillion roubles from oil and gas sales, up 21% from 2023, when weaker oil prices and a fall in gas exports reduced the revenue by 24%. However, this 2024 target was revised down from initial plans for 11.5 trillion roubles.
Russia has heavily increased defense and security spending since launching its military operation in Ukraine in 2022, leading to two consecutive annual deficits exceeding 3 trillion roubles, about 2% of GDP.