Russia’s oil and gas revenues plummeted by 35% year-on-year in May, reaching 512.7 billion roubles ($6.55 billion), according to the latest finance ministry data. The decline reflects the dual pressures of weakening global oil prices and Western sanctions, further straining the Kremlin’s budget as it continues funding its military operations in Ukraine.
As a key revenue source—contributing 25-50% of Russia’s federal budget over the past decade—the sharp drop in energy earnings poses a significant challenge. Compared to April, May’s revenue fell by 53%, driven by lower oil prices and a stronger rouble. Analysts had anticipated a smaller decline to 520 billion roubles, but the actual figures fell short.
The finance ministry now expects June’s oil and gas revenue to be 40.3 billion roubles below projections, signaling deeper financial strain. Russia’s budget deficit for the first four months of 2024 stood at 3.2 trillion roubles (1.5% of GDP), with the ministry revising its 2025 deficit forecast up to 1.7% of GDP—a significant jump from the earlier 0.5% estimate.
This adjustment follows a 24% cut in projected energy revenues, anticipating prolonged low oil prices. From January to May, oil and gas income dropped 14.4% compared to the same period last year, totaling 4.24 trillion roubles.
Russia had reportedly opposed recent OPEC+ production increases, highlighting its reliance on higher oil prices to stabilize its economy. With energy markets remaining volatile, the country faces mounting fiscal pressure as sanctions and market shifts continue to erode its primary revenue stream.