Export revenue of Russian oil companies continues to decline due to Urals, - Bloomberg

- In the last week ending January 4, Russia's average revenue from oil exports amounted to $959 million per week, the lowest figure since the beginning of the war in Ukraine. This data is based on reports from Argus and tanker shipping statistics.

Compared to early October, oil revenues have fallen by 35%, which is equivalent to a decrease of about $500 million per week. At the same time, compared to early December, the decline was 15%, or nearly $200 million weekly.

“Since the introduction of U.S. sanctions against Rosneft and Lukoil, the average price of Urals, the main export grade of Russian oil, has dropped by almost 40%. In early January, Urals oil was priced at $36.69 per barrel at Baltic Sea ports and $34.82 for shipments through the Black Sea. The Far Eastern grade ESPO, supplied to China, has fallen to $47.55 per barrel,” the agency reports.

Bloomberg emphasizes that the decline in oil revenues creates additional problems for the Russian budget. In 2024, oil and gas revenues are expected to decrease by 2.3 trillion rubles compared to the previous year, and according to estimates by Reuters, they fell to 410 billion rubles in December, the lowest figure since August 2020.

In the draft budget for 2026, the Russian government expects oil and gas revenues to grow from 8.6 to 8.9 trillion rubles. However, these forecasts are based on an average price of Urals at $56 per barrel, which is about 60% higher than current market prices, Bloomberg reports.

Sergey Alexashenko, former Deputy Minister of Finance of the Russian Federation and ex-Deputy Chairman of the Central Bank, points out the uncertainty regarding how the Ministry of Finance will be able to compensate for the revenue decline if low prices persist. He links the drop in Russian oil prices to U.S. sanctions against Rosneft and Lukoil, which account for about half of the country's oil production and exports.

As previously reported by Reuters citing industry sources, under current price conditions, oil production and exports at some Russian fields have already become economically unfeasible. Only projects with tax incentives for mineral extraction remain profitable, while companies paying tax at the full rate are losing at least $5 on each barrel sold.